Most Asked Questions

Read through these questions and answers to learn more. Or, please contact an Investor Advisor for help.

How do I get started as an investor with Morcado Trust?

You'll need to decide if Morcado mortgage investment is right for you. Please look through our website and consider your investment horizons and risks carefully.

You can book a call with an Investment Advisor to ask questions and set up your account. You'll need to provide the minimum investment amount, from either a registered savings account or a bank account.

Once you've decided to invest with us, your Investment Advisor will guide you through your process to start earning attractive, passive income every month.

What is the minimum investment amount?

Currently, the minimum investment amount required to participate in Morcado mortgage investments is $50,000.

As we continue to grow and expand our platform, we are actively working towards reducing this minimum amount to $5,000.

Our goal is to make mortgage investments accessible to a broader range of investors while maintaining the high standards of security and reliability that we're known for.

Can I add more funds to my investment later?

Yes, typically you can add funds after your initial investment. The amounts you can add later depend on whether you're investing through registered savings accounts or non-registered accounts. Please read the specific rules here.

When is my investment amount 'returned'?

Your investment is tied to the mortgage lifecycle of the Morcado mortgages you've invested in. If a mortgage renews, your investment stays locked into that mortgage at the same or higher rate (never lower). When the mortgage is paid out, your investment amount is 'returned' to your registered or non-registered Morcado account to either reinvest or withdraw.

Can I reinvest my returns back into Morcado mortgages?

Yes, you can. With a Morcado registered savings account, you can reinvest once you accumulate $1,000 in returns.

Are there any hidden fees or charges that I should be aware of?

We pride ourselves on maintaining complete transparency with our investors.

  • There are no hidden fees or unexpected charges involved in your investment with us.
  • Should there be any changes or additional fees in rare circumstances, we commit to communicating these clearly and promptly.

The rates and fees we disclose upfront are what you can expect throughout your investment journey. Our goal is to keep you informed and confident in your decisions.

How does Morcado choose mortgages for its platform?

Morcado Trust thoroughly assesses each mortgage offered and applies grades (A, B and C) to indicate risk exposure, from lower to medium. A lesser grade may come with a higher return rate. Determining the grade involves evaluating several factors, including weighted loan-to-value (LTV), the property's location and the borrower's credit score. See more about our track record here.

We don't do 'high-risk' mortgages (which come with a significant chance of default).

The grade assigned offers you a level of comparison to consider, allowing insight to help you align your investment choices with your risk tolerance and financial goals.

What are the typical return rates for investments, and how are they calculated?

At Morcado Trust, the return rates for uninsured, high-yield mortgages typically vary between 8% and 12%. These rates are typically higher than traditional lending market rates due to the increased risk based on the borrower's qualifying details (such as lower creditworthiness or complex income sources).

We're transparent in calculating return rates, taking into consideration the best interest of our investors and market dynamics. Rates are indicative and subject to change based on market conditions and the specific characteristics of each mortgage.

Are you a MIC?

Morcado Trust is not a MIC (Mortgage Investment Corporation), which pools investor funds for mortgage lending and therefore pools the return rates investors receive.

In contrast, we offer direct mortgage investment, where you become the 'lender' to receive a specific return rate for the amount you've dedicated to a specific mortgage loan, without having to do the behind-the-mortgage work for a secure investment prospect.

Our direct-investment business model typically produces higher return rates compared to MICs.

How does Morcado investment compare to GICs?

Morcado's direct mortgage investment platform typically has higher return rates compared to GICs (Guaranteed Investment Certificates). However, our high-yield, uninsured mortgage offerings come with a higher risk profile compared to GICs, which are government-protected and offered for specific term lengths.

Uninsured mortgages are backed by the security of residential real estate and tied to the mortgage lifecycle — so are better suited for medium to long-term investment horizons. Learn more here.

How does the current market and economy affect mortgage investment?

Currently, interest rates are at a 22-year high. Higher mortgage rates can lead to higher returns on mortgage investments, offering an advantage to investors. If rates start to drop, your investment returns are locked into a particular rate for the duration of the mortgage loan.

If rates go down, high-yield mortgages are still likely to outperform other interest-rate-based investments, including GICs and MICs.

Real estate and, by extension, mortgage investments can act as a hedge against inflation. As property values and rents tend to rise with inflation, so do mortgage investment returns.

Impact on Borrowers. However, higher rates can increase financial pressure on borrowers, which may lead to a higher incidence of default.

Recession Risks. In the event of a full-scale recession, the challenges could intensify. Borrowers might face increased difficulties in meeting their payment obligations, affecting the stability of mortgage investments.

At Morcado Trust, our strict vetting process takes into consideration a borrower's ability to maintain payments.

How does Morcado Trust make money?

Morcado's revenue model is intentionally aligned with our investors' success. Our primary revenue comes from a straightforward servicing fee structure:

  1. Servicing Fee. We apply a 1% servicing fee, taken directly from each mortgage payment we collect. These earnings are tied to our efficiency in managing and collecting mortgage payments.
  2. Net Interest Rates. From the mortgage inventory list (viewed on our website and in your Investor Account dashboard once your account is set up), the interest rates you see are net of our servicing fees. This transparency means the returns displayed are exactly what you can expect – no hidden costs or deductions.
  3. Other Borrower Fees. We may also levy fees related to mortgage management on borrowers, in line with industry norms. We act with full transparency — these fees are always clearly communicated.
What is Morcado's past performance?

Morcado Trust has been operational in a beta mode for the last three years. During this period, we are proud to report that none of our mortgages have gone into foreclosure. Our team is backed by True North Mortgage, our parent company — out of 17,000 prime mortgages, only 3 have experienced foreclosure (considered a stellar record and speaks to a stringent vetting process).

How easily can I take out my money?

Morcado Trust values transparency about the liquidity and exit options of your investment, and we encourage potential investors to consider their needs and investment horizons carefully.

Once you invest in a mortgage through us, your funds are tied to that mortgage through any renewals or until it is fully paid out. This structure is key to how our investments work. You can indicate where your returns are deposited, giving you the ability to access your passive income separately from your original investment funds.

Given the mortgage lifecycle, our investment platform may not be suited for those seeking short-term investment opportunities or needing quick access to their funds.

We do not currently offer early withdrawal or liquidation options. Once your funds have become available (no longer tied to the mortgage), you can either reinvest them or request to withdraw your funds.

Please note that registered savings accounts have rules for withdrawal, as well as tax implications.

How are mortgage investments taxed in registered accounts?

Investments in mortgages within registered savings accounts, such as RRSPs, come with specific tax advantages — the income earned is not subject to taxation at the time it is earned.

However, taxation rules may vary depending on the type of registered account and the specific tax regulations in place. Please consult with a tax professional or financial advisor for personalized guidance on your specific tax situation and how mortgage investments within your registered accounts may impact your overall tax strategy.

What are considered complex income sources?

Some examples of borrowers who may face mortgage approval complications through traditional borrowing channels are:

  • Entrepreneurs, sole proprietors, or corporate business owners
  • Commissioned-based earners whose income may change yearly
  • Landed immigrants
What is the difference between loan-to-value (LTV) and weighted loan-to-value (Weighted LTV)?

Loan-to-value or LTV, is a ratio that compares the size of a mortgage to the value of the property it is used to buy. The lower the LTV, the lower the perceived 'risk' of investing in a mortgage.

Simple example: If a home is worth $100,000 and the mortgage is $75,000, the LTV is 75% ($75,000 divided by $100,000).

Weighted LTV is more complex than LTV and comes into play when the borrower has more than one property securing a single mortgage (also known as a blanket mortgage). The formula considers the equity (the value of the property minus any existing mortgage) of all involved properties, except the primary one.

What happens if a borrower misses a payment?

You won't receive your monthly return payment until the borrow payment is collected. We immediately attempt to collect missed payments and work with the borrower to resolve issues for future good standing.

What happens if a borrower goes into arrears (default)?

At Morcado Trust, we understand that life can bring unexpected challenges, and sometimes borrowers may have difficulty making their mortgage payments. Here are the basic steps we take if a borrower goes into arrears:

Initial Contact and Support. We reach out to the borrower as soon as they miss a payment to understand their situation. Our goal is to work together to find a solution that helps the borrower get back on track.

Negotiation and Repayment Plans. We may explore options like modifying the mortgage terms, extending the repayment period, or creating a repayment plan that suits the borrower's current circumstances.

Our aim is to avoid foreclosure whenever possible and help the borrower catch up on payments.

Legal Notice. If the borrower continues to miss payments, we are obligated to follow the province's legal process, including issuing a formal notice of default.

This notice outlines the outstanding payments and the steps that need to be taken to resolve the arrears.

Foreclosure Proceedings. Foreclosure is a legal process through which we may take possession of the property to recover the outstanding mortgage debt.

This is considered a last resort, and we only pursue it if other options have been exhausted.

Property Sale. If foreclosure becomes necessary, we sell the property to recover the outstanding debt.

The proceeds from the sale are used to pay off the mortgage balance and cover any associated legal costs.

Our priority is to protect the interests of our investors. Throughout the process, we maintain open and transparent communication with all parties involved, including borrowers and investors.

What happens to the investor if a mortgage goes into default?

The mortgages offered on our platform are high-yield, uninsured mortgages. For an uninsured mortgage, the 'default' process is more complicated, and in addition to not receiving the installment payments, the investor may suffer a loss.

Let’s look at two examples:

Example 1: Sufficient Funds from Foreclosure (Investors Made Whole)

Suppose a property with an original valuation of $100,000 was mortgaged for $80,000, and the borrower defaulted on their payments. After going through the foreclosure process and incurring $5,000 in legal fees, the property was eventually sold for $90,000. In this scenario:

  • Legal Fees: $5,000
  • Mortgage Amount: $80,000
  • Proceeds from sale: $90,000

Morcado Trust would retain the $5,000 to cover the outlay of legal fees, the original investors would receive their original investment, plus any accrued interest, and whatever was left over would be given back to the borrower.

Example 2: Insufficient Funds from Foreclosure (Investors Take a Loss)

Now, let's consider a different scenario where the property was sold for a lower amount after foreclosure:

  • Legal Fees: $5,000
  • Realtor Fees: $4,200
  • Morcado Direct Expenses: $500
  • Total Expenses: $9,700
  • Mortgage Amount: $80,000
  • Proceeds from sale: $70,000

In this case, let’s assume the property was sold for only $70,000. Total expenses incurred during foreclosure were $9,700.

As a result, there is only $60,300 available to cover $80,000 in investor funds. Since this amount is less than the outstanding mortgage of $80,000, investors would not be fully repaid. Each investor would only get 75.38% of their original investment back. In addition, the investor would lose out on any accrued interest.

It's important for investors to understand the potential risks involved in high-yield mortgage investments, as there is a possibility of losing a portion of their principal in cases where the property's value significantly decreases, or the foreclosure sale does not cover the full outstanding mortgage amount and accrued interest.

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