Should You Get A Private Mortgage?

A significant number of Canadians are borrowing from private lenders to purchase homes because not everyone can get mortgages from Canada’s lending institutions and big banks.

The Dream of Home Ownership

The above is the reality of the housing situation these days as traditional lenders get stricter in their lending practices because of the rising real estate prices and low interest rates. After all, they are also businesses that have to weigh factors and lending in present time can be quite risky.

The situation is made worse by the fact that down payments have also risen, with homes costing a minimum of half a million needing a down payment of at least 10% of the home’s value. That kind of money is not something that everyone can produce out of pocket; hence, most Canadians will have to resort to loans to make their dreams of home ownership come true.

Light at the End of the Tunnel

Private mortgage lenders not to be confused with private investigation agencies in the GTA are a blessing to many Canadians because they allow those who need funds to borrow via a private mortgage. A private mortgage is not the same as borrowing from a trust or bank as the funds come from a private individual or a business.

The business of private lending accounts for about 4% to 5% of the mortgage market in Canada. While this figure is still small, this is a huge leap considering that private mortgages used to be less than 1% of all mortgages during the recession of 2008 and 2009.

With the above said, it is hard to deny that private lenders play a significant part in Canada’s real estate landscape, more so that those who are self-employed (15% of Canada’s workforce), turn to them because they can’t get a traditional mortgage without third-party income validation.

Private mortgage lenders are also a top option for first-time homebuyers who have bad credit, have an illness, have lots of debts, have just divorced, have lost a job, is a non-resident, or owe back taxes. These people are potential homeowners who happen to not have a good income record or do not possess as big enough take home salary such as in the case of small business owners who have just started their companies.

It should be noted that borrowing from a private mortgage lender means paying higher interest than what a traditional lender charges. With this mentioned, private lenders also help borrowers repair and rebuild their credit ratings so that they can get better rates with other lenders in the future.

Benefits of a Private Mortgage

There are many ways to determine whether a private mortgage is right for you but the best way in our opinion is to weigh the benefits of a private mortgage that you can avail of. They are as follows:

  • There is less red tape
  • Enjoy mortgage flexibility
  • Higher lending risk tolerance
  • Good rates.
  • Real time lending speed
  • Real-world purchasing advice from the lender
  • Easy pre-approval of mortgage

Need help getting a private mortgage? Contact us at Mortgage Central Nationwide. Our professional mortgage brokers will help you get in touch with a private lender and help you with your private mortgage application.

 

Is a Private Mortgage Right for You?

There are just many situations in life when a “conventional mortgage” (i.e. a bank acts as the lender) doesn’t fit your needs. Private lender financing in Canada is up over 60% than in previous years, so it’s important to explore all of your options. Whatever type of financing you’re looking for, one of our Toronto mortgage brokers can help! Here we’re going to explore what a private mortgage is and what situations it works best in. The only thing that is different about a Canadian private mortgage is the lender, so let’s get started.

Why Would You Want a Private Mortgage?

There are many reasons someone would choose private mortgage lending over more traditional forms of credit. Maybe you have a poor credit history or no credit history at all (which likely isn’t the case in this situation, but everyone is different!) You could also be self employed or retired. Some people have high risk properties that can discourage traditional lenders, and others will need a private loan to bridge the gap between what they have and what they need to move into a new home. If you need to take out a second mortgage to pay off bills, a private mortgage may be right for you.

Why Private Lending?

When you work with Toronto mortgage brokers, you’ll get access to many different private and conventional lenders. If you want to be able to apply to as many lenders as possible to get the best outcome without ruining your credit, you’ll want to work with us. You’ll have a two week period from the time you first apply for a mortgage where your credit won’t be “dinged” for excessive inquiries. This is why when we take your application we start applying to multiple lenders for you, making sure you get the best mortgage possible.

What are the Benefits of a Private Lender?

When you work with a Canadian private lender, you get a lender who understands your situation. Why should you have to apply to just one lender and hope that the outcome works out in your favour when you can get the right loan at the right price from someone nearby? Interest rates now are at the lowest they’ve been in many decades, so if you can cash in on low interest rates now you’ll be able to have a great mortgage that you can live with today and tomorrow. Even if in the end you don’t go with a private lender, you’ll know that you explored all of your options and came out with the best mortgage for you.

If you’d like to learn more about private mortgage lenders and your financing options, contact us today! One of our Toronto mortgage brokers will help you through the process and help you find the loan that’s just right for you. From a fixed rate private loan to a variable rate conventional loan, you’ll find the one that fits your needs.

Looking for a private mortgage in Toronto? Apply today!