Not everyone has the ideal credit score or can show enough income to qualify for a loan from traditional lenders like banks and alternative lenders. The property itself can also be the reason why you are not able to obtain a mortgage through those channels. Maybe you want to renovate your home and the penalty to break your existing mortgage is too high. That is where a mortgage broker that deals with private lending can assist you in obtaining the financing that is suitable for you and your needs and circumstances.
What is a Private Mortgage?
Private mortgages and loans are funds provided by a Mortgage Investment Corporation or a private individual to be paid back by the borrower typically in interest-only installments.
Common reasons people take out a private mortgage are:
- Financing for home renovations
- Purchase of investment properties
- Funding of personal interests (vacation, wedding, university, car…etc)
- From self-employment
- Low credit score
Who are private mortgage lenders exactly? Any individual or business entity that provides their financial means to finance others with set deadlines and interest rates. As a matter of fact, there are more than two types of private mortgage lenders. Let’s take a look at the different types of lenders in general.
Banks — Banks are also known as ‘A’ lenders since they are governmentally backed and involve the strictest criteria for eligibility within lenders in the industry. Lenders which fall under this category are not referred to as private lenders.
Credit Unions — Privately-owned mortgage companies and credit unions are nonetheless considered private lenders since they are not federally-owned or maintained. Many people prefer this mode of lending since the eligibility criteria is relatively lighter than that of A lenders (banks). However, that does not mean a private mortgage will be lent to anyone. A fair credit score standing is still required when opting for a loan from these lenders.
Private Lenders — Individuals licensed in the mortgage industry may provide private loans to others. The borrower or the property itself may be the reason for the need to obtain private financing. . Private lenders can also be friends, family, and any other person willing to lend their own funds.
Private Mortgage Eligibility
Wondering how to get a private mortgage? It is relatively simple to qualify for a mortgage or loan from a private lender through a mortgage broker in Ontario since they primarily cater to those who cannot find funding by traditional means. Depending on who you opt for your private mortgage, the eligibility criteria will vary. For example, borrowing from relatives and acquaintances is proven to be cost-effective and simple since they are not strict with criteria and may offer you low to no interest rates. However, many people nonetheless aim for a private lender that is a licensed private mortgage broker in order to avoid staining personal relations.
Please contact me , Jodi Habel, to make acquiring your private mortgage smoother than you can imagine. After all, it may be your first time opting for a private loan, but I have acquired relationships with major banks, credit unions, monoline, and alternative lenders through my 15 years of working in Canada.