Frequently Asked Questions

Q. What is my risk in a mortgage investment?

A. Your funds are invested in a real estate secured loan to a third party. Since our loans are primarily first mortgages, that means our loan takes first priority to get paid out over any loan owing on the property. While there is always some risk associated with third-party lending, our strict mortgage underwriting guidelines and stringent assessment process helps us lend on projects with real value in the marketplace. As well, before funds are advanced to the borrower, updated progress reports and inspections are required to ensure the equity of the project remains intact. If there are pre-sales on the project, Gibraltar investors always get paid first to assure principal pay-down. At the end of the day, we have an enviable record of successful paid-out mortgages.

Q. How can Gibraltar afford to pay me 10 percent interest when banks are charging less on their mortgages?

A. Gibraltar lends money to borrowers on a short-term basis only – usually 12 to 24 months – which commands higher interest rates. Gibraltar’s funds are borrowed as “interim financing” at a higher lending rate. In other words, as soon as the improvement of the real estate project is complete, the borrowers have a hard asset that they can either refinance for a lower rate or sell. Either way, once the exit strategy has been completed, you are repaid the principal amount you invested.

Q. Why would a borrower approach Gibraltar for financing rather than a conventional bank?

A. Lending practices have changed dramatically in recent years. Large financial institutions typically prefer long-term loans, and their corporate directives limit lending in certain real estate categories, creating an opportunity for lenders like Gibraltar. Today, conventional banks are geared more toward generating profits through fees, focusing on products like loan insurance, mutual funds and financial planning services.

As well, banks usually analyze the collateral and personal security of the borrower first before qualifying a loan, whereas Gibraltar’s primary focus is the strength of the secured real estate asset. This, and the fact that we can offer more flexible terms, is attractive to borrowers.

Many businesses, whether multinational corporations or smaller development companies, raise capital for expansion and growth through private investors by way of public offerings, corporate bonds, the stock market, limited partnerships, share offerings or mortgage financing – just like Gibraltar.

Q. What is the term of my investment?

A. Typically, each mortgage investment is a 12 month term with an option for the borrower to renew for up to one additional year. Once the mortgage pays out, you can roll your funds over into another mortgage investment or request to have your principal paid back to you.

Q. I invested in real estate before and had poor results. Why is Gibraltar different?

A. A real estate investment through Gibraltar is different, and here’s why:

• It’s important not to place Gibraltar in the same category as most real estate investments. Conventional real estate investment involves direct ownership and rental of property, and personal financing from a bank where you assume the liability. Investing in a Gibraltar first mortgage positions you as the lender, not the borrower, and provides you with the security of the first mortgage on valuable property.

• Conventional real estate may not provide you with a return until you sell the property. Typically that may take more than a couple of years. In that time, the real estate market may change, potentially lowering or eliminating the returns you earn on the sale of your property – presenting a much higher investment through Gibraltar provides returns immediately. You receive monthly interest payments, and your yield is fixed at 10 percent throughout the term.

• Conventional real estate ownership is time consuming, involving legal work, administration, maintenance, dealing with real estate brokers, the selling process and possibly finding renters. This adds up to a huge headache. A Gibraltar first mortgage is simple and easy. We do all the administrative work and day-to-day monitoring of your investment for you, which makes a Gibraltar first mortgage even more valuable to you in terms of your time savings.

Q. How much time must I spend monitoring my mortgage investment?

A. Very little. Once you select which mortgage to invest in and complete your simplified documents, you can relax and focus on other important activities in your life. Gibraltar handles all the day-to-day administration and notifies you when your mortgage pays out or if there are any significant changes. When the borrower pays out, you decide whether to have your principal investment paid back to you to roll your funds into a new mortgage.

Q. How do I receive my monthly interest payments?

A. Your monthly interest is deposited directly into your bank account.

Q. Does Gibraltar have other investment products besides your individual first mortgage investment?

A. Yes. We offer GMIC and The Mezz Fund. Gibraltar’s Mortgage Investment Corporation (GMIC) is a pool of diverse mortgages that are funded and managed by an investment corporation. Investors own shares in the corporation and earn returns on the interest received from the mortgages. Our GMIC provides a unique blend of respectable returns with lower risk when compared to many other types of investments and offers more liquidity. Please contact us for more information on the conservative GMIC.

The Mezz Fund offers essentially second mortgages that provide higher yields to investors, however the risk is increased due to the second mortgage position. Please contact us for more information on The Mezz Fund.

Q. I have never invested in a mortgage before. How do I make the decision to invest with Gibraltar?

A. Like any new experience, most people are cautious – just like purchasing your first home or investing in mutual funds for the first time. With a Gibraltar first mortgage, you have the opportunity to fully review the formal documentation before your funds are invested, to make sure you are completely satisfied with the loan agreement.

You choose your investment amount (minimum $10,000 cash, $25,000 if RRSP), and you choose the first mortgage investment from the Gibraltar portfolio. The entire investment procedure is quick and uncomplicated, the friendly Investor Services Team is always on hand to assist you.

Q. How do I get started?

A. Investing with Gibraltar is easy. Visit our First Time Investors page for step-by-step instructions or give one of our Investor Services Reps a call.
 

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