Canadians who have difficulty qualifying for a bank mortgage might turn to private lenders for private mortgages. Private mortgages are different from conventional loans offered by banks. These mortgages are best suited for borrowers seeking flexibility in form of terms and conditions.
Although qualifying for a private mortgage is easier, it does have certain drawbacks for people with low credit scores. A private mortgage typically has a higher interest rate, additional fees, greater down payments, and a shorter loan term. Still, while private loans may be the only accessible option under the circumstances, they are still worth exploring, especially given all of the advantages of working with private lenders.
Why are private mortgages gaining popularity among Canadians?
- No minimum income restrictions: Unlike banks, private mortgage lenders value the mortgaged property far more than your salary.
- No minimum credit score required: Private mortgages are the sole option for people with low credit ratings or who have yet to establish a credit history.
- Shorter approval period: Approval times with private lenders might range from several hours to 1-2 days.
- Easier qualification: Private lenders require far less requirements than banks and helps avoid unnecessary documentation and due diligence.
Unlike banks, most private mortgage lenders are willing to negotiate the collateral, length, interest rate, amount of prepayment, fees, payment form, and other loan terms. Furthermore, the majority of private mortgages are interest-only, with no requirement for principal repayment.
What Considerations Should You Make Before Applying for a Private Mortgage Loan?
When applying for a private mortgage, you must consider a variety of issues, including a higher interest rate and a number of additional fees such as legal, appraisal, and loan processing fees. The first thing is that private lenders require a larger down payment. A private mortgage typically requires a down payment of at least 15%. Another feature of private mortgages is that they are often short-term, lasting no more than 1-3 years.
Although private mortgages are more expensive and require a greater down payment, they are sometimes the only viable option for many Canadians seeking a new loan. Meanwhile, hiring an experienced mortgage broker in Abbotsford can assist you in considering all of your options before applying and determining the best conditions for your financial situation and mortgage needs.
Get Approved With Experienced Mortgage Brokers
Sandhu & Sran Mortgages is your trusted choice for private mortgages in Abbotsford, Edmonton, and Surrey. Our experienced private mortgage brokers are ready to take the guesswork out of your mortgage process and get you approved at the lowest rate possible, no matter what your credit score is.
Contact our mortgage brokers today to find out how we can help you in securing a private mortgage deal.