PRIVATE MORTGAGES
WHAT IS A PRIVATE MORTGAGE?
A Private Mortgage is a financial transaction between a borrower and a Lender for the purpose of purchasing or refinancing a home. Private Mortgages are not governed by the same rules and guidelines that conventional mortgage financing is governed by, and therefore have different lending criteria than traditional mortgages offered at Banking and Credit Institutions.
The use of Private Mortgages are on the rise in recent years due to many factors including constrained lending guidelines imposed by the Government of Canada on Lenders, an increase in non-residents requiring funds, and self-employed borrowers.
Typically private mortgages are short term mortgages in the range of 6-12 months.
They are meant to be interim type financing with the ultimate goal of paying out the mortgage or financing into a conventional mortgage in the future.
WHY WOULD YOU CONSIDER ONE?
Private Mortgages definitely have their place in the market, in situations such as described below:
- Need to consolidate unsecured debts
- Borrowers needing to rebuild their credit
- Borrowers that do not hold Canadian Credit
- Self-employed borrowers with unverified income or income that fluctuates
- Bridge financing – if you have bought a house before you sold your existing home
- Homes that do not qualify for conventional financing
One of the primary benefits of private mortgages is the ease of the application/approval process. Typically Private Mortgages require less documentation, less hoops to jump through, and more lee-way in their approval process.
When evaluating a loan application, typically Financial Institutions put the majority of weight behind the borrowers credit standing and ability to service their debt; while Private Lenders put more weight on the quality of the property, and the equity in the property. This is why many borrowers who cannot qualify for a conventional mortgage, can often qualify for a Private Mortgage, albeit at a higher interest rate.
PRIVATE MORTGAGES
WHAT IS A PRIVATE MORTGAGE?
A Private Mortgage is a financial transaction between a borrower and a Lender for the purpose of purchasing or refinancing a home. Private Mortgages are not governed by the same rules and guidelines that conventional mortgage financing is governed by, and therefore have different lending criteria than traditional mortgages offered at Banking and Credit Institutions.
The use of Private Mortgages are on the rise in recent years due to many factors including constrained lending guidelines imposed by the Government of Canada on Lenders, an increase in non-residents requiring funds, and self-employed borrowers.
Typically private mortgages are short term mortgages in the range of 6-12 months.
They are meant to be interim type financing with the ultimate goal of paying out the mortgage or financing into a conventional mortgage in the future.
WHY WOULD YOU CONSIDER ONE?
Private Mortgages definitely have their place in the market, in situations such as described below:
- Need to consolidate unsecured debts
- Borrowers needing to rebuild their credit
- Borrowers that do not hold Canadian Credit
- Self-employed borrowers with unverified income or income that fluctuates
- Bridge financing – if you have bought a house before you sold your existing home
- Homes that do not qualify for conventional financing
One of the primary benefits of private mortgages is the ease of the application/approval process. Typically Private Mortgages require less documentation, less hoops to jump through, and more lee-way in their approval process.
When evaluating a loan application, typically Financial Institutions put the majority of weight behind the borrowers credit standing and ability to service their debt; while Private Lenders put more weight on the quality of the property, and the equity in the property. This is why many borrowers who cannot qualify for a conventional mortgage, can often qualify for a Private Mortgage, albeit at a higher interest rate.