It’s certainly disappointing to be turned down for a mortgage by a bank or other type of financial institution, but it definitely isn’t the end of the world. This is because Canadians typically have the option of applying for a private mortgage. Private mortgage lenders are typically Mortgage Investment Companies (MIC) or simply individuals. These companies and/or individuals can help you out if your traditional mainstream mortgage options haven’t worked out.
Private mortgage lenders are in the business of offering asset-backed, short-term loans to potential Canadian homebuyers. The funds from the loans are then used to purchase the home and/or property. While conventional mortgages may last for a couple of decades or longer, a private mortgage is usually offered for short-term loans such as up to five years in length, but most typically in 1 year, interest only payments. Thousands of Canadians and businesses utilize private mortgage loans each year as it’s considered a good alternative to regular mortgage options.
When to seek a private mortgage
There are several different circumstances which may lead you to seek a private mortgage. Some of these are as follows:
1-You’re looking for a short-term loan.
2-You need quick financing and don’t have the time to wait for the long approval process of a regular mortgage.
3-Your credit rating and/or history is bad and all other institutions have turned down your mortgage applications.
4-Your income is hard to verify and regular mortgage lenders have turned you down because of it.
5-You may be interested in acquiring an unconventional home or property which a lending institution or bank may not be interested in financing.
6-You need to pay out Canada Revenue Agency (CRA) for income tax arrears owing in order to be able to refinance institutionally in the future (No institutional lender will pay out income tax arrears).
7-You need a construction loan for renovations on your home.
Private mortgage lenders
Most private mortgage lenders are businesses or individuals who are looking to invest surplus funds over a short period of time as a way to make profit from the interest. Lending money to homebuyers who have been turned down by more traditional mortgage lenders is an ideal business situation for them. The money is lent to the homebuyer and the property is used as collateral. Some private lenders may prefer to deal with individuals while other lenders are more interested in doing business with those looking to buy commercial properties. In addition, you may find some of the lenders like to do business in a certain geographical area, which could be close to their operation or home.
The best way to track down a private mortgage lender is to get in touch with a reputable and professional mortgage broker such as the team at MortgageMeister.com. We will be glad to help in your search for a private mortgage as we know exactly how they work and who to contact. Private mortgage lenders will usually look beyond the numbers and your credit history etc. These individuals and organizations treat each application individually and see it as a potentially unique investment opportunity. Many lenders will ask to meet the homebuyer to assess their investment opportunity. If a private mortgage lender agrees to finance your mortgage, be aware that they will charge higher interest rates than banks and other financial establishments.
However, our team of knowledgeable professionals at MortgageMeister.com will search for the best rates available and will be able to process the loan as quickly as possible. We will take care of the entire process from start to finish and will work hand-in-hand with you every step of the way.
Seeking professional help is advisable when you’re seeking a mortgage in Canada, as experienced mortgage brokers will be able to introduce you to reliable lenders. Please feel free to contact us at MortgageMeister.com at your convenience if you’d like friendly, professional assistance and guidance when it comes to private mortgages or any other type of mortgage.