Investment FAQs
1. How secure is my investment?
- All investments are backed by 1st and 2nd mortgages on Western Canadian real estate
- Loan to Values rarely exceed 75% and more typically are between 50 and 65%. The loan to value is calculated by taking the loan amount and dividing by the appraised value of the property. $500,000 loan / $1 million appraisal = 50% LTV
- Personal and/or Corporate guarantees on every loan
- Every loan approved by Liberty's experienced 6 member credit committee
- Liberty's primary focus is on capital preservation
2. What return can I expect on my investment?
Liberty Mortgage and TSX Composite Index - Comparative Returns
Liberty Mortgage and S&P/TSX Composite Index comparison chart, based on $100,000 principal investment over a five year period. Chart compares volatility of public stocks vs. numerous Liberty Mortgage investments which returned 12 % per annum from December 31, 2003 to December 31, 2008.
- Syndicated Mortgage investors are offered returns of up to 10 to 14%, per annum for first mortgages and up to 14% or greater for
second mortgages - Mortgage Investment Corporation (MIC) investors typically receive a net return of 8% to 10% per annum
3. How long is my investment committed for?
- Syndicated Mortgage investors are subject to the term of the specific mortgage in which they invest
- All of Liberty's loan terms are written for twelve months or less
- MIC investments are open ended subject only to the redemption policy of the particular MIC chosen
4. Who decides which loans Liberty Mortgage approves?
- Every loan must be first approved by Liberty's highly experienced 6 member credit committee
- All loans are reviewed and underwritten in house
5. What level of due diligence does Liberty conduct?
Expand Answer:
- Liberty's Credit committee conducts a thorough due diligent review of the following documents for each mortgage as required including but not limited to:
- Commitment Letter
- Mortgage Application
- Personal Net worth statement
- Copy of purchase agreement if new purchase
- Copy of latest appraisal, including real property report and zoning status Land Titles Report
- Notice of Property Tax Assessment
- Environmental Report & Geotechnical report
- Development permits
- Building permits
- Occupancy permits
- For development projects
- Rezoning application
- Preliminary layout approvals
- Waste water management plan
- Water supply management plan
- Access to utilities
- Evidence of Pre-sales
- Site visit to each property comprising security
- Corporate Financial Statements
- Proof of income, employment letters
- Signed Personal net worth statements
- Personal Credit Reports
- Corporate Credit Reports
- Legal searches
- Copy of leases from tenant
- Rent roll
- Explanation of exit strategy
- Proof of take out financing or proof of other financing for the project (term sheets)
- Proof of equity contribution by borrower
6. Why don't Liberty's borrowers just go to the bank?
- Banks focus on specific criteria such as proving cash flow, an individual's credit bureau report, TDS/GDS ratios, Geographic areas, Income verification, etc.
- If the borrower does not meet all these criteria they are automatically declined
- Liberty is an equity lender and therefore our primary focus is on borrowers cash equity of not less than 25%
- Liberty's main focus is low Loan to Value
- The fact that the banks will not lend in every situation provides us an excellent business niche
7. How is Liberty mortgage different from other private lenders?
- Liberty is a boutique niche lender that prides itself in taking multiple layers of collateral in order adequately protect investors capital
- Liberty originates, underwrites, funds, and administers all mortgage loans in-house
- Our main lending criteria is significant borrower equity and low LTV
- Liberty's team has a significant amount of their own capital invested in the very same mortgages as our investors
8. Is Liberty Mortgage licensed?
- Liberty and its Mortgage Associates are licensed by the Real Estate Council of Alberta (RECA), the regulatory body that govern all mortgage and real estate brokerages
- We adhere to a strict code of ethics and rules and regulations as set forth by the Real Estate Act
9. What is the minimum investment required?
- Minimum investment of $25,000 for syndicated mortgages
- Minimum investment of $5,000 - $25,000 for MICs (MIC specific)
10. How often is my interest paid?
- All of Liberty's syndicated mortgages are paid monthly unless the loan is in default
- MIC investments vary with some paying monthly, quarterly or semi annually
11. Can I use funds within my RRSP/RRIF to invest?
- All of Liberty's MICs are RRSP/RRIF eligible
- Syndicated mortgage investments are RRSP/RRIF eligible subject to certain conditions
12. Can you tell me about Liberty's experience?
- Liberty's team has a combined 120+ years of real estate, investment and market experience, and a combined 40+ years of direct licenced industry/business experience. (see Our Team page for more details)
- Liberty has been operating since 1996, founded by Gordon Taylor