Private Mortgages
What is a private mortgage?
A private mortgage is a short-term, interest-only loan to buy or refinance a property. Private mortgages are offered by independent individuals, institutions, or mortgage investment corporations.
Most Canadians require a mortgage to buy a home. But generally, the process of getting approved for a mortgage isn’t easy. You need to be in good financial health and meet requirements for income, debt, and credit score. So, what happens if you aren’t fully qualified under traditional guidelines, or if you have had some past credit issues? In some cases, a private mortgage could be an alternative that will help you achieve your home ownership goals.
How does a private mortgage work?
A private mortgage is a loan offered by an individual or institution to prospective homebuyers and existing homeowners who are unable to secure a traditional loan from a financial institution, like a bank.
Home buyers and home owners may look to private mortgages if they have poor credit history and don’t qualify for traditional loans based on the regulations of other mortgage lenders. Private lenders are more likely to see the mortgage as an investment and therefore aren’t as strict regarding credit history and background checks. A private mortgage may also make sense if you’re buying a unique type of house, you don’t plan to own the property for very long (such as in the case of “flipping a home”) or if you have a non-traditional source of income.
Private loans are often short-term, with typical amortization periods lasting six months to three years. The goal is that, after making on-time payments over this term, the borrower will be in a better position to apply for a mortgage from a traditional lender.
The interest rates offered by private mortgage lenders tend to be higher than those offered by traditional lenders, but mainly because the payments you’ll make on this type of loan are interest-only. With an interest-only mortgage, none of your payment goes towards the principal, so the total amount owed does not get smaller over time, as it would with a typical mortgage. However, owning a home is something Canadians value very much and a private mortgage may be just the way that allows you to get into the real estate market, or keep your home.
How do I qualify for a private mortgage?
The process of getting a private mortgage could be much faster and easier than qualifying for a traditional mortgage.
Here at 911 Mortgage Brokers – The Mortgage Centre, we provide private mortgages, second mortgages and home equity loans based on your home equity, not on your age, income or credit. Since the inception of our brokerage, we specialize in alternative mortgages, home equity loans and private mortgages. This experience has allowed us to become experts in this niche mortgage market. Through years of experience, we have honed valuable relationships with serious and reliable private lenders.
We have accumulated the knowledge and expertise which allows us to consistently secure private mortgages for our clients at very competitive interest rates and favourable terms for our clients.
How much can I borrow with a private mortgage?
Generally speaking, you can borrow up to 80% of the value of your home, after subtracting the balance on your first mortgage. In other words, you can borrow up to 80% of the equity in your home, depending on the location and marketability of your home. There are some lenders that are willing to lend up to 90% of the value of your home. As we work with lenders all across Canada, we offer private mortgages in most major cities and urban areas; however we also have some lenders offering private mortgages in rural areas and private lenders willing to lend on cottage properties.
Which lenders offer a private mortgage?
Here at 911 Mortgage Brokers – The Mortgage Centre, we work with independent individuals, institutions, and mortgage investment corporations. As such, we have a wide array of lender options which allows us to offer private mortgages of all sizes. We also offer customized private mortgages as the needs of each individual borrower are unique.
Our experienced 911 Mortgage Brokers are very familiar with all the private mortgage lenders as well as their strengths and preferences. This expertise, coupled with our smart mortgage technology, allows us to match you with a private mortgage lender that best fits your needs, your goals and your lifestyle.
What are the benefits of a private mortgage?
There are many benefits to obtaining a private mortgage. When a traditional bank rejects a borrower, it doesn’t mean that homeownership is a foregone conclusion. A private mortgage offers the borrower the opportunity of home ownership becoming a reality.
Existing homeowners can also benefit from a private mortgage. Many Canadians have accessed private mortgages to get them through a difficult personal situation such as a divorce, a bankruptcy or even a business shutdown as it happened to many people during the most recent Covid-19 pandemic. A private mortgage offers an alternative solution to “getting back on track.”
We understand that self-employed individuals may have flexible sources of income, that there are construction workers with seasonal income, and contractors with low declared incomes. A personal financial mishap such as an accident or going through a divorce may cause your credit to because less than stellar. It is in these situations when a private mortgage becomes a lifesaver.
Here at 911 Mortgage Brokers – The Mortgage Centre, we understand that life happens. We work with our private lenders to create mortgage products outside the box!
Contact us for a free, no obligation and confidential consultation with a 911 Mortgage Broker today. We will explore the best private mortgage options for you.
