Does anyone have any experience investing in second mortgages? If an investor has a small capital available and want to offer it as a number of small 2nd mortgages, what kind of conditions should go on the mortgage contract? Here is a scenario: Location is Ontario, Canada. Each 2nd mortgage is around $25,000. Minimum equity in a property is 30%. This would be based on an appraisal. Term 1-2 years. Interest rate is around 10-12% per year. 1. I am concerned about fire insurance. How can you enforce the insurance if the owner stops paying? If the house is destroyed and there is no insurance, the 1st mortgage will take everything and the 2nd would be a total loss. 2. What do you do if the owner stops paying? Of course you can go through a power of sale, but this is expensive process. Are there any good guides on mortgages? Any comments or suggestions would be much appreciated. Thank you.
