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Mortgage without a home?


MG2014
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Any thoughts on how to get a mortgage without buying an actual home? Or said differently, how do you get non recourse debt at current interest rates, at something crazy like 4x your equity (80℅ LTV) without having to buy property?

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By paying a massive interest rate!  The point of a mortgage is it's cheap because it's secured against the property.  So without the property...

 

There are other forms of collateral than a house.

 

 

Of course.  But,

a) none that I know of that can be borrowed against so cheaply, and

b) the OP specified not buying property, which I (rightly or wrongly) took to mean not having to have collateral. 

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You can get a portfolio loan from some lenders.  I know Tri-State Capital Bank (https://www.tristatecapitalbank.com/wealth-management.aspx) specializes in lending against portfolios and business interests at mortgage-like rates. 

 

You can't get a 30 year note that isn't secured, and you probably won't get anything that's as low as a mortgage either.  But if you have a few million in securities and private business interests I don't think it would be much of an issue to get 50% of that as a mortgage.

 

The reason mortgages are cheap is because the government is backing them.  Most banks don't hold the mortgages they originate, they just service them.  A bank is originating the mortgage and reselling it ridding themselves of the risk.  Banks tend to keep the best mortgages on their books.  These are ones with lower LTV's, jumbo's that aren't repurchased and loans with good rates.  This is why the average maturity for US banks is in the 10 year range yet the majority of the mortgages in the US are 30 years.  Very few banks are keeping 30 year paper on their books.

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You can get a portfolio loan from some lenders.  I know Tri-State Capital Bank (https://www.tristatecapitalbank.com/wealth-management.aspx) specializes in lending against portfolios and business interests at mortgage-like rates. 

 

You can't get a 30 year note that isn't secured, and you probably won't get anything that's as low as a mortgage either.  But if you have a few million in securities and private business interests I don't think it would be much of an issue to get 50% of that as a mortgage.

 

The reason mortgages are cheap is because the government is backing them.  Most banks don't hold the mortgages they originate, they just service them.  A bank is originating the mortgage and reselling it ridding themselves of the risk.  Banks tend to keep the best mortgages on their books.  These are ones with lower LTV's, jumbo's that aren't repurchased and loans with good rates.  This is why the average maturity for US banks is in the 10 year range yet the majority of the mortgages in the US are 30 years.  Very few banks are keeping 30 year paper on their books.

 

Do you know if the portfolio loans have MTM triggers?

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You can get a portfolio loan from some lenders.  I know Tri-State Capital Bank (https://www.tristatecapitalbank.com/wealth-management.aspx) specializes in lending against portfolios and business interests at mortgage-like rates. 

 

You can't get a 30 year note that isn't secured, and you probably won't get anything that's as low as a mortgage either.  But if you have a few million in securities and private business interests I don't think it would be much of an issue to get 50% of that as a mortgage.

 

The reason mortgages are cheap is because the government is backing them.  Most banks don't hold the mortgages they originate, they just service them.  A bank is originating the mortgage and reselling it ridding themselves of the risk.  Banks tend to keep the best mortgages on their books.  These are ones with lower LTV's, jumbo's that aren't repurchased and loans with good rates.  This is why the average maturity for US banks is in the 10 year range yet the majority of the mortgages in the US are 30 years.  Very few banks are keeping 30 year paper on their books.

 

Do you know if the portfolio loans have MTM triggers?

 

It depends on what you're putting up.  If it's a marketable portfolio then I believe they do.  But some banks will engage in portfolio lending where the "portfolio" is really a collection of assets, some cash, business interests, a rental house, a boat, an RV etc.

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I don't know if you are considering leveraging securities, but there have been a few topics on cheaper forms of leverage already. Good resources below.

 

http://www.cornerofberkshireandfairfax.ca/forum/strategies/getting-leverage/

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/leaps-portfolio-cash-and-leverage/msg150912/#msg150912

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