When a mortgage is funded by several investors, each month’s interest has to be split — fairly, exactly and on time.
The basic split
Each investor has a position (the amount they funded) and a rate. The company keeps the spread: the borrower’s rate minus the investors’ rates.
Example: a $500,000 loan at 10% interest-only, funded by Investor A ($300,000 at 8%) and Investor B ($200,000 at 8.5%).
| Calculation | Monthly amount | |
|---|---|---|
| Borrower pays | 500,000 × 10% ÷ 12 | $4,166.67 |
| Investor A | 300,000 × 8% ÷ 12 | $2,000.00 |
| Investor B | 200,000 × 8.5% ÷ 12 | $1,416.67 |
| Company spread | remainder | $750.00 |
When the borrower doesn’t pay
Distributions are usually based on interest collected. If the borrower misses the payment, the investors’ shares for that period are held and released in a later run when the payment comes in. Some lenders advance investors from company funds instead — a policy decision that should be applied consistently and recorded.
Fees
- Management fees charged to investors reduce what they receive; decide whether they are charged on interest earned or interest paid.
- Referral fees may be paid from the spread or from an investor’s interest.
- When an investor’s share is held, any fee on it should be held too and deducted when the share is released — otherwise the fee is paid from nothing, or never collected.
Sub-investors
An investor may have their own sub-investors. They can be paid through the head investor (who receives the total and passes it on) or directly — and if the head investor’s share is held, the sub-investors’ parts should be held the same way.
Controls
Distributions move other people’s money. Good practice: one person prepares the run, a second person approves it, payment is made from trust by EFT or cheque, and every investor gets a statement.
How Amortivo handles it
Amortivo calculates each run from interest actually collected, applies each investor’s rate, holds and releases shares, handles management and referral fees and sub-investors, and pays by EFT file or cheque after a second person approves. Statements and T5 preparation come from the same records. See investors & distributions.