Investing in real estate offers security, but owning it can be risky when markets soften. Mortgage investing offers downside protection relative to an equity investment when real estate values decline. We lend on average 54% of the value of a home, so our portfolio can absorb a drop in the housing market with minimal expectation of loss.
We provide mortgages to borrowers whose financing needs are not being met by larger financial institutions. The average size of mortgage in our portfolio as of December 31, 2019 is $261,296 with a weighted average interest rate of 8.66% and a portfolio average loan-to-value of 53.9%. The loan-to-value ratio of any mortgage at the time of underwriting may not exceed 75% of the current appraised value.
We consider our mortgage portfolio high quality yet we are able to charge higher rates than the banks because we offer flexibility, short term solutions and we serve a segment of the market that is currently underserved.
A typical loan in our portfolio has an interest rate of 6.5% to 8.5% per annum, a loan-to-value ratio of 55% – 65%, a one or two-year term and monthly amortized mortgage payments.
(At December 31, 2019)