Why would I need a Private Mortgage ?

Posted on: February 23, 2021

As life is unpredictable, your financial condition can be better, or you can confront temporary financial strain. In that situation, if you have equity in your house, you can get funds for emergency needs. The question arises here, how can you get access to your home equity? The answer to this question is, you can refinance your house or can opt for a second mortgage. What if you have a challenging credit history, unstable source of income, high-risk property investments, have high-interest rates debt, recently lost job, or faced unforeseen expenses, a private loan can be a band-aid solution for you at that moment.

What is a Private mortgage?
A private mortgage is a short-term loan for borrowers seeking financial aid from traditional lenders but get declined. There could be numerous reasons for not getting approved; they have a bad credit history, can not prove their income, can not pass the stress test, and many more. At this stage, they knock on the door of private lenders who provide them funds for emergencies at higher-interest rates. Also, in most cases, this loan is an interest-only loan and only lasts for 1 or 3 years. In Canada, private mortgagees do not have a set of terms, conditions, and lending fees. If a lender charges you a certain amount, it is not necessary that another will charge you the same.

Criteria for Private mortgage-
• Lenders require a large down payment if you are buying a house.
• 80 % loan to value if you want to refinance.
• 600 or above beacon score.
• Most Private lenders skip the income requirements, but clients should have enough income to pay the monthly interest-only mortgage payments.

Who would need a Private mortgage?
Self-employed people- Banks are often looking for the borrower who has a stable source of income. However, if you are self-employed, your income gets fluctuated significantly. That is why self-employed prefer private mortgages as they do not have to verify their income.
People with poor credit- People who have a challenging credit history get declined by the banks because they do not fit under their approval criteria. The cause behind poor credit could be bankruptcy, mortgage arrears, not paying credit card bills on time, etc.
High-risk property investments- High-risk properties can be either residential or commercial. Residential includes properties located far from the city, agriculture zoned properties, cottages, multiplex, and apartment premises. Commercial properties include such as mechanic shops, restaurants, lands, hotels, and restaurants.
Bridge financing- Private mortgages also play the role of bridge loans as they can be used to obtain longer-term funding in terms of paying the down payment for purchasing the house while you are awaiting the selling of your current home. Additionally, you can use this aid for renovating the house to increase the home’s selling price.
New immigrants- Sometimes, it becomes a hard nut to crack for newcomers to get a mortgage for several reasons. Firstly, they do not have a credit history in Canada as Equifax and Transunion are able to grab credit information within Canada. Consequently, they must start from scratch because they do not have a credit record in Canada. Secondly, they do not have a good employment record, which deteriorates their situation. Thirdly, most banks require at least a 35% down payment, which is a massive amount for them to arrange as a first-time homebuyer.

Pros of Private mortgage-
• Renovate the house.
• Consolidate your high-interest debts.
• Emergency funds for wedding and education
• Travel the world.
• Short and quick approval process, no need to pass the stress test.

To sum up, private mortgage can be a good option for those who have a large down payment, but they have a poor credit history, unstable income source, and can not pass the stress test. A private mortgage is flexible and less time-consuming than traditional mortgages. However, borrowers pay high-interest rates to lenders. If you seek a private mortgage and are ambiguous, we at MB Mortgages can certainly show you the path that can be beneficial for your specific needs. Please give us a call at 905-458-6929/416-939-7131.

Why choose us-
As a leading Mortgage Brokerage, we have strong relations with multiple banks and numerous lenders. We work with Canada’s leading lenders to provide you a mortgage solution that fits your budget. Our mortgage and financing process is amazingly simple, we represent you and match you with the best suited mortgage as per your needs. This way we can guide you through this complicated process with our years of mortgage financing experience.
• We are dedicated and professional Accredited Mortgage Brokers in GTA.
• We are well trained and have experience in the mortgage financing field more than 10 years.
• We can shop around with different lenders to get you the best possible mortgage rates and conditions as well.
• We have different options for different income and credit level with access to number of private lenders to suit borrower’s needs.

Contact us-
We are a professional mortgage broker in GTA. We can help you secure a mortgage with best mortgage interest rates. We are located at 2896 Slough Street, Unit # 6, and Mississauga, ON L4T 1G3. Call MB Mortgages Inc. today at 905-458-6929/416-939-7131 for your queries or you can email us at: info@mbmortgages.ca or you can visit our website at www.mbmortgages.ca

The information provided in this blog post is intended to provide general information. You should consult with a mortgage professional to fully determine the scope of your situation. MB Mortgages shall not be held liable from usage of the information provided on this page. Individual situation may vary.