A private mortgage is a lending option for potential borrowers who do not meet the requirements of typical mortgage lenders. The better your credit and income, and the lesser your debt, the more likely you are to be able to qualify for a terrific low mortgage rate through the standard mortgage qualification process.
However, many Canadians do not have the option of being approved for a mortgage by banks or other institutional lenders. In an era of rising property values and high unemployment rates, combined with the stress test, an increasing number of people are finding it difficult to qualify for a mortgage from a traditional lender. This is where a private mortgage comes into play.
Who Is Eligible To Apply a Private Mortgage?
Private mortgages give borrowers the opportunity to realize their dream of house ownership or to refinance their mortgage in order to reduce obligations, even if they are not eligible at banks or other more conventional lending organizations. Private lenders are able to give borrowers the chance to find a property even when their banks turn them down since they typically have different and far more flexible qualification standards than traditional mortgage lenders.
In order to make up for the increased risk that the lender is incurring, private mortgages also come with higher interest rates and additional lender and broker fees. Because the broker and the lender determine their own fees, they have higher costs than traditional lenders.
Private loans may be the best option for:
- Self-employed people with poor credit or no credit history who may find it difficult to demonstrate their income
- Individuals who are unable to qualify for special self-employed mortgage choices through some of the institutional lenders.
- People who have filed for bankruptcy or been declared insolvent, or who have recently been involved in a consumer proposal
- Those who possess properties that are not refinanced
- Anyone in need of quick home loan closing or emergency cash.
- Excellent choice for a bridge loan for people who have purchased a home but haven’t yet sold their previous one
The only way to obtain a mortgage for certain people may be through private mortgages. They should be utilized more as a short-term solution than a long-term one because they are frequently costly. It’s always advisable to go through the procedure with a reputable mortgage broker in Abbotsford if you think a private mortgage would be the best option for you.
At Sandhu & Sran Mortgages, our mortgage brokers work diligently to find you a competitive private mortgage in Abbotsford with the best terms and conditions available. No matter what your credit score is, we’ll get you approved in no time.