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.
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