Is A Private Mortgage Right For Me?
Occasionally, it will make sense for a borrower to look outside of conventional mortgage options and utilize a private mortgage to buy a home or investment property. A private mortgage is a type of mortgage product where funds are given by an individual or business for a short period of time by leveraging the equity in the borrower’s home. This is a mortgage financing solution for when regular financing options with a mortgage institution aren’t available to an individual. To help you understand better, the experts at Canadian Tailored Mortgage Solutions have put together more information about this mortgage. This will help you figure out if a private mortgage is right for your needs.
What is a private mortgage?
A private mortgage is created between private individuals for the purchase of real estate. The lender, who could be a friend, family member, colleague, or investment firm, will lend the money to the borrower just as a bank would, securing themselves with a mortgage note or comparable contract. The mortgage is then paid back over time through monthly principal and interest payments, earning the lender interest on the original principal balance.
Before taking on a private mortgage, a borrower must first talk to their mortgage broker to discuss their needs and goals and to see if this is the right option for them. The funds can be used to consolidate debt, pay off any existing high-interest loans and improve credit so the following year when the private mortgage matures, the borrower will be in a better position to refinance and get a better rate. This is an interest-only type of mortgage, so the borrower needs to have a clear exit strategy before deciding to take the loan for the desired term. It is crucial to discuss what type of fees will be charged when getting a private mortgage and a ballpark fee amount for when it’s time to pay off the mortgage. The pricing varies. A full application and sometimes appraisal is needed to give accurate pricing. As a result, it is essential to discuss mortgage pricing beforehand with a reliable mortgage broker.
Benefits of a private mortgage
1. Fast closing mortgage option
Private mortgages tend to be a much quicker form of financing than conventional mortgages. While getting a mortgage with a bank usually requires a much more time-consuming and tedious approval process, getting a private mortgage is much quicker and less demanding. Depending on the property in question, a borrower can be approved within hours and receive the funds in as little as a day or two if an emergency mortgage, last-minute mortgage, or quick close mortgage is required.
2. Fewer document requirements
Private mortgage lenders see the application process differently than a traditional bank. A private lender won’t be interested in obtaining all of the paperwork and going over it with a fine-tooth comb as a big-name bank would. Private lenders take risks. It’s part of their job, and if you are self-employed and don’t happen to have a W2 form, lack a steady work history that traditional lenders demand, it won’t matter as much in this application process. With a private mortgage, you’re given a fighting chance at applying for a mortgage.
3. Available for those with bad credit or not enough income
As private mortgages come with higher interest rates and provide lenders with an added level of security, many private lenders are not concerned about whether their borrowers have low or unprovable income or low credit scores. Homebuyers who have been rejected by the bank can easily apply for a private mortgage and get approved with much less hassle and in much less time. All in all, as long as they can pay the interest, they are typically considered to be the perfect candidate for a private lender.
If you are looking for a mortgage agent in Pickering, Ontario, then reach out to us at Canadian Tailored Mortgage Solutions. Our mortgage agents will help you determine if a private mortgage is right for you. Our experts are well versed in the mortgage industry with an accumulated thirty years of experience in dealing with mortgages. We will talk to you and discuss what suits your needs best based on your requirements, financial situation, and associated factors. If we come to the conclusion that a home equity loan isn’t the right product for you, then we can come up with other solutions, such as home equity lines of credit or refinancing your current mortgage.
Our fees vary on a case-to-case basis once an application has been completed and the file has been reviewed. Our job at Canadian Tailored Mortgage Solutions is to build and maintain stellar relationships with lending institutions across Canada. We have studied their products and their services, understand their fine prints, and we have knowledge of loan options from the best lending programs available to cut and taper through to find the right fit for our mortgage consumers. To learn more about the services we offer, please click here. To get in touch with us, please click here.