Increase Your Chances of Private Mortgage Approval Even with Bad Credit

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You may be thinking that getting a private mortgage for a new home is not within the realm of possibility if you’ve had financial troubles in the past. Having bad credit is often perceived as a huge deterrent when trying to get mortgage approval of any kind. However, with the right approach, getting a mortgage approved can be achieved, especially with the help of mortgage professionals.

The fact is, mortgage approval for people with bad credit is becoming increasingly common. This is partly because of the increasing competition of lenders who are in the mortgage market and partly because of other factors, such as the changing real estate climate in Canada.

So how does one get private mortgage approval with bad credit? The process for getting approved for a loan despite having bad credit begins with applying to the right lender. Note that each lender will process applications based on who they perceive to be a less risky borrower for them. This is why specific lenders each have their own criteria. Read more about the factors that can help your mortgage application below!

A Co-Signer with Good Credit

Having a reliable co-signer such as one with a good credit score can make your application more appealing to lenders because it means that someone will be willing to pay on your behalf should you be unable to do so. A good co-signer is usually a close friend or relative who won’t mind having this responsibility with you.

Property Appraisal

The value of your property is typically what the lender can expect to recover if you are unable to pay for your loan for whatever reason. It is also the basis for the amount that the lender will lend to you. For these reasons, a professional appraisal is often required when applying for any type of mortgage. Note that some lenders will also have a list of trusted appraisers and may ask for a new appraisal if you hired someone unknown to them.

Real Proof of Income

There is no way of getting around providing proof of income when applying for a mortgage because your proof of income is also proof of your ability to pay the lender. Lenders also look into your GDSR or Gross-Debt-Service-Ratio to make sure that a good portion of your income will be available for making payments. Generally speaking, lenders prefer a GDSR of less than 30% though some may be more lenient and allow as high as 45% GDSR.

Know that there is more than one way to secure a private mortgage or get a home loan. If you approach the right people, even having bad credit ratings won’t be a hindrance to getting mortgage approval. If you have questions, simply contact us to allow our mortgage professionals to assess your financial situation and map out a way for you to successfully get a mortgage or a loan. If you have bad credit, talk to us today and find out how you can get a private mortgage or other types of home loan through our network of lenders.

Bank Mortgage Declined? Get a Private Mortgage Instead!

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Qualifying for a mortgage these days is seriously a lot of hard work. Banks are stricter than ever, government regulations are tightening up, and interest rates are rising too; meaning, it will even be more challenging to qualify for a mortgage from a bank more so for people who don’t have an impeccable credit history.

People who are self-employed, living in non-hot real estate areas, and those with other loans are often declined by banks and told that they don’t qualify for a home loan. Because of this, more Canadians are finding ways to fulfill their home financing needs with the help of a private mortgage lender. Far from what most people think that private mortgage lenders are last resort options, the way they operate these days can make them a wiser choice than borrowing from banks.

Why Consider Borrowing from a Private Mortgage Lender?

You can borrow from a private mortgage lender with less fuss than borrowing from huge financial institutions like banks. This is because private mortgage lenders are often small companies or individuals who offer loans for a small profit. They are not as bureaucratic as banks and tend to consider each borrower as a person rather than just a number. They also set their own criteria for lending because their funding is from a group of investors or can just be an individual investor. Because of this, they are more flexible with their process and can entertain people with unconventional circumstances.

Who Are Recommended for a Private Mortgage?

Generally speaking, people who are likely to be declined by banks have a better chance of borrowing from a private mortgage lender. Examples are those who:

  • Have bad credit
  • Are self-employed
  • Want to purchase raw land or unique property
  • Wanting a short-term loan
  • Need funds for home improvement projects but do not qualify yet for certain loans
  • Need access to their home equity but can’t refinance an existing mortgage for various reasons
  • Need funds for debt consolidation

How a Private Mortgage Can Help You

The best person to ask about the ins and outs of how a private mortgage works is a mortgage professional who has a keen knowledge of alternative lending services. A private mortgage may work differently depending on several factors so all details must be considered. This is why mortgage professionals ask for your information so that they can determine how you can qualify for a private mortgage. Once it has been determined that you are eligible for a loan, the next assessment will be about your ability to pay. After the mortgage professional has these details, several mortgage solutions that meet your needs and means will be proposed to you. After this is done, a deal will be put in place together with an exit strategy so you’d know exactly until when you are supposed to pay and by how much.

Mortgage professionals do this service for a fee and what you get is a great deal that can help you smooth out your finances. Have you been declined by a bank? Contact us to get a private mortgage loan instead!

Should You Get A Private Mortgage?

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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?

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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!