Private Mortgages
When traditional banks and credit unions can’t offer you a mortgage, you are not out of options.
What is a Private Mortgage?
Private mortgages are a flexible financing option for situations where banks, credit unions, and even equity-based lenders will not help. While this option usually has a higher interest rate, the conditions of the contract are kept to a minimum.
Reasons for a Private Mortgage
Credit issues are usually one of the main reasons that a person would require a private mortgage. For example, a person coming out of bankruptcy may need more time to rebuild credit before a bank will consider giving that person a mortgage.
A prime mortgage lender is required to follow strict guidelines, which can make it difficult to obtain a mortgage. When working with private lenders, a common-sense approach is applied to lending that involves considering other important details resulting in a client now qualifying for a mortgage or mortgage renewal. Our goal is to make this happen for you. Are you having difficulty obtaining financing, contact us now to see how our common-sense approach is different. We work for you, to meet your financing needs.
Other reasons where people would seek private mortgages may include:
- When someone currently in a consumer proposal who would benefit by paying off a mortgage through private financing, which will allow them to rebuild credit quicker
- When someone who is self-employed that has difficulty providing sufficient proof of income to banks and other prime mortgage lenders
Requirements for a Private Mortgage
In most cases, the only requirements that a private lender will need to approve a private mortgage are:
- Credit report
- Appraisal
- Something to reasonably show the ability to make payments
These requirements are all considered on a per case basis and will affect the credit rate.
Another factor that is considered in determining the interest rate on a private mortgage is the location of the home in question. In general, a property located in a major urban area is viewed more favourably than a rural or remote location, yielding a better rate.
That said, our private lenders have approved mortgages all over Ontario as well as in other provinces. We work with local private lenders who know the real estate market well and can offer creative financing solutions to even the toughest situations.
Importance of an Exit Strategy
Although helpful in challenging circumstances, private mortgages should be viewed as a short term solution that will address the immediate need of financing and allow for the situation to be resolved. A person’s end goal should always be to move to a cheaper and more reasonable mortgage once things are back on track.
Many private lenders offer open terms without any penalty to break the contract early and can be in the first or second position, depending on the situation. In the case of a second mortgage, it can be timed to the maturity date of a first mortgage so that they can be combined upon maturity.
The key to private mortgages is knowing the full story, whether good or bad, so we can create a game plan to address the issues and have an exit strategy in place.
Contact Us
The Graeme Moss Solution
If you have a difficult situation that requires private financing, don’t give up! There may be a solution for you.
Contact us today for a free, confidential review of your situation. We are here to help.
People we’ve helped.
