FAQ

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

You can book a call with a Mortgage 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 through Morcado, your Mortgage Investment Advisor will guide you through the process of starting to earn attractive, passive income every month.

The minimum amount required for mortgage investment through our platform is $10,000.

As we continue to grow and expand our platform, we hope to reduce the minimum 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.
 

You can add funds to your Morcado account anytime after your initial investment. However, minimum amounts are required to invest once again:

• $1,000 minimum for registered savings accounts
• $10,000 minimum for non-registered accounts

Please note that you can only add funds to a mortgage you've already invested in if it is still available to receive investment. Otherwise, you'll need to direct your new investment amount to another mortgage listed on our platform.

Please read our platform rules here for more info.

Your investment is tied to the mortgage lifecycle of the particular 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 reinvest or withdraw.

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

For non-registered accounts, the minimum amount to reinvest is $10,000.

We pride ourselves on maintaining complete transparency with our investors.

• There are no hidden fees or unexpected charges involved in your investment with us.
• If there are any changes or additional fees in rare circumstances, we commit to communicating them to you 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.

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, providing insight to help you align your investment choices with your risk tolerance and financial goals.

At Morcado Trust, currently, the return rates for uninsured, high-yield mortgages offered on our platform 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, and take 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.

Morcado Trust is not a MIC (Mortgage Investment Corporation), which pools investor funds for mortgage lending and, therefore, pools the return rates investors receive. MIC returns are typically provided as quarterly dividends.

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. Returns are deposited monthly into your designated account.

Our direct-investment business model may produce higher return rates compared to some MICs.

Morcado Trust obtains mortgages for its platform via strong lender relationships, built on a long-standing history with our parent company, True North Mortgage.

These high-yield mortgages serve borrowers' short-term needs through stringent qualifications and flexible terms, and our platform is designed to offer them as an investment opportunity for everyday Canadians.

The high-yield mortgages available on Morcado's investment platform may offer higher return rates than GICs (Guaranteed Investment Certificates). 

However, these mortgages are uninsured and come with a higher risk profile compared to GICs, which are government-protected and offered for set 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.

Currently, interest rates are higher than in the past. 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 may still outperform other interest-rate-based investments, including GICs and some 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.

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. In line with industry norms, we may also levy fees to borrowers in relation to mortgage management. We act with full transparency to always clearly communicate what additional fees may be charged.

Before our full launch in 2024, Morcado Trust was operational in beta mode for over three years. To date, we proudly report that none of our mortgages have gone into foreclosure.

Our team is backed by our parent company, True North Mortgage. Over several years in operation, only three of True North's 17,000 prime mortgages have experienced foreclosure. 

Our record is considered 'stellar' and speaks to a stringent mortgage vetting process.

Morcado Trust does not offer standard deposit accounts (such as chequing or savings) and so we are not covered under the federal government Canadian Deposit Insurance Corporation (CDIC). Any uninvested amounts parked at Morcado Trust are held within a large Canadian bank.

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

Once you invest in a mortgage through our platform, 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, allowing you 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 become available again (no longer tied to the mortgage), you can reinvest them or request to withdraw your funds.

Please note that registered savings accounts have rules for withdrawal and carry tax implications.

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.

Some borrowers may face mortgage approval complications through traditional borrowing channels, for example:

• Entrepreneurs, sole proprietors, or corporate business owners
• Commissioned-based earners whose income may change yearly
• Landed immigrants

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.

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.

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.

The mortgages offered on the Morcado platform are high-yield, uninsured mortgages. The 'default' process is more complicated for uninsured mortgages, 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 returned 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, only $60,300 is 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.