Need a mortgage to buy a new home? Want to refinance your current mortgage? Have a bad credit score? If a bank denied you a mortgage due to a low credit score, you can get an approval with private mortgage. It is an ideal mortgage for those having a bad credit, who disclose their income in an unusual way, or who might require a self-employed mortgage, who want to purchase their ideal home after a bank refusal, or those who want to refinance an existing property.
Private Mortgage- What Exactly Is It?
If a prospective borrower is unable to get approved for a mortgage through a bank or a conventional mortgage lender, obtaining the funds they need may be possible with a private mortgage. Traditional lenders, such as trust firms, banks, and credit unions are referred to as A or B lenders who provide a low rate for a better credit score and income.
There are many potential homebuyers who mortgage applications are not approved by banks or other institutional lenders, due to unforeseen circumstances, including rising property prices, high unemployment, and the stress test.
With private mortgages, borrowers get the opportunity to realize their dream of homeownership or refinancing their mortgage, even if they are declared ineligible by the banks and other conventional lending organizations.
In order to make up for the increased risk that the lender is incurring with a borrower bad credit score, private mortgages also come with higher interest rates and additional lender and broker fees.
Since the interest rate is quite high in private mortgages, in majority of cases, the principal remains unpaid as the monthly payments cover the interest rates only. This means it may take you decades to pay your debt.
Who’s Eligible to Apply for a Private Mortgage?
For those who are determined to obtain a mortgage but are having difficulty getting their application accepted by a traditional lender, private mortgages is the last yet best option. It works even with a bad credit and even if you are unable to provide your proof of income. Private mortgages are the best option for:
- Individuals without a credit history or with bad credit who may find it difficult to prove their income and who are unable to qualify for specific self-employed mortgage options.
- People who have filed for bankruptcy or been declared insolvent.
- People who own properties that are not refinanced.
- Anyone in need of fast closing home loans or emergency cash.
- People who need a bridging loan and purchased a home before selling the previous property.
Conclusion
Private mortgage is the only option to obtain a quick mortgage for people having a bad credit history and those who are self-employed. Since these loans are quite expensive, they should be used more as a short-term solution than a long-term one. It’s always advised to talk to a private mortgage broker in Abbotsford to find out if a private mortgage is the best choice for you or not. If you are looking for a reliable mortgage broker company to assist you in getting residential mortgage, refinancing mortgage, and construction loans in Abbotsford, Sandhu & Sran Mortgages is here to help you out. Contact us to discuss your home buying needs today.