Do you Understand a Syndicated Mortgage?

Investing in real estate is something many want to do. However, they don't necessarily have the funds to buy a second home, become a landlord or start flipping houses for profits.

Understanding what a syndicated mortgage is cannot only help somebody invest in real estate, but it can also help those struggling to get a mortgage, get a mortgage. Here's how a syndicated mortgage works.

What is a Syndicated Mortgage?

When two or more investors fund a mortgage, it becomes known as a syndicated mortgage. This allows investors to become the lender and invest in all types of projects from single family homes to condo buildings and more.

This isn't a Mortgage Investment Corporation because the investors get to choose the projects they put their money into. A syndicated mortgage will also give specific security to the investor by allowing their name to be registered on the title. If the project were to fail, they will have the opportunity to recoup their capital.

Growth of Syndicated Mortgage

Since about 2008, the syndicated mortgage industry has grown quite a bit. This is due to the conventional banks requiring more equity, larger down payments and making it harder to get a traditional mortgage. Many have started looking for third party lenders and the syndicated mortgage may be the best option.

What Type of Investment is Required?

If you want to invest in a syndicated mortgage, you won't need a large sum, like you might to buy a second property. You can invest a few thousand dollars and be a part of the real estate industry, as an investor.

On the other side of things, if you can't become approved by a conventional mortgage lender, a syndicated mortgage may be the answer. This type of mortgage may not require the same credit standards or proof of income for you to qualify.