How to Make Money from Private Mortgage Investment Opportunities

The word ‘mortgage’ often evokes thoughts of a financial responsibility that stretches on and on for decades. There are countless corporations ready for you to take a number and become one in a long line of faceless debtors. But there is another way: private mortgage investments.

What are private mortgage investments?

A private mortgage investment involves a contract to borrow money from a private individual – not a bank – which will be paid back according to the stipulations and rates (usually between 6 to 13%). While this may sound like a daunting initiative, it can be a mutually-beneficial arrangement.

How does it work?

While banks have certain borrowing criteria that need to be met before any loan is approved, this is not the case for private mortgage investments. In these cases, a borrower can be approved even if they are self-employed, their finances have hit a temporary slump, or other generally disqualifying reasons.

Repayment durations can be short-term, or longer-term, the latter more resembling those from traditional bank and loan establishments.

What are the risks?

Private investment opportunities generally bring to mind loan sharks, but this is not the case here. While there are still the well-known risks, smaller businesses that offer loans are minimising it by allowing investors to contribute to the overall loan amount, like a bond.

Who can benefit?

Both parties can benefit from a private mortgage investment. For the borrower, they can experience an expedited approval progress, and for the lender, they can make a nice profit while expanding their investment portfolio.

How do the investors make money?

As with any loan, profit is predominately made from the interest payable. There is still some risk, of course, but this is limited by the large down payment made – typically 30 to 40% of the loan amount. If the debtor defaults on their payments, the investor is able to claim the property and sell it, recouping the loss and making a profit.

What about investment groups?

As briefly discussed above, investment groups mean investors do not need to put forward the finances on their own. Groups can pool their money, allowing for bigger loans, with a lending company processing the agreement. This also reduces the risk of one person losing too much if a loan falls through or a payment is delayed. The lender will take their cut before the investors get their payout, accounting for fees, etc., but it means you won’t have to worry yourself with the paperwork.

Private mortgage investment has been gaining traction over the last few years, with many turning away from traditional bank loaning schemes. As with any major financial decision, it is always recommended you seek professional advice before signing any documents or supplying any money.

About Us

Slater Forbes are one of the leading property investment companies specialising in off-plan property

20 Years Experience

Please note that Slater Forbes Investments is not authorised or regulated by the Financial Conduct Authority and is not permitted to offer financial or investment advice to UK resident investors, whether or not the intended investments are regulated or unregulated. We strongly encourage all prospective purchasers to consult an FCA-authorised Independent Financial Adviser before committing to any form of investment. This is not an offer to participate in a collective investment scheme as defined in section 235 of the Financial Services and Markets Act (2000) and Investors will not have access to the Financial Services Compensation Scheme or the Financial Ombudsman Service. This website, videos and documents referred are intended to provide general information concerning the proposed development, construction and the management of ”The Development’. The information provided has been prepared in good faith and to give a fair overall view of the Development. Photographs and electronically generated images, furnishings and accessories featured are for illustrative purposes only. All information provided by us at our web site or otherwise is provided on an illustrative basis. This email is for the sole use of potential business partners and/or prospective purchasers. We recommend that all appropriate commercial, tax and legal enquiries and advice is taken before entering into a legally binding contract to purchase a property forming a part of the development. All investments attract a degree of risk and Slater Forbes encourage all clients to undertake their own due diligence. Property prices can fluctuate and the value of your investment may go down as well as up. Prices and financial illustrations are provided as guidance and are examples of the possible discounts, yields and returns that investors could achieve. Copyright in and to this website and documents and videos referred belong to Slater Forbes, which is a trading name of Green Key Sales and Lettings Ltd, which is a UK registered company no 10037602.