When You Should Consider a Private Mortgage?

When it comes to finding the right mortgage to suit your financial needs, you can place your trust in 1onefund. If you’ve gone through the process of qualifying for and acquiring a mortgage, you may have heard of private mortgages. Whilst many individuals favor a traditional mortgage, sometimes it may not be the best option for you financially. In those cases, you may want to approach a private mortgage lender to provide you with the mortgage. If you’ve been declined a loan from a traditional mortgage lender and you want to take out a loan for purposes other than purchasing a home, acquiring a private mortgage would be your best bet. Call us today to find out more information.

 What is a Private Mortgage?

A private mortgage is a type of loan that is given out by a private lender and not a traditional lender, like a bank. The terms of this type of mortgage generally range from anywhere between 6 months to 3 years. A majority of these loans do not require a principal amount to be paid but instead require monthly interest payments. Unlike traditional lenders, private mortgage lenders offer more freedom and leniency. Private mortgage lenders approve mortgages based on the value of the individual’s property rather than their credit history.

 Why should you consider Private Mortgage lenders?

1. If you have poor credit.
2. If you are self-employed with no steady source of income.
3. If you have been rejected by traditional lenders.
4. If you need a second or third mortgage.
5. If you are a newly landed immigrant with no credit history.
6. If you are in need of immediate funds in a short period of time.

Differences between traditional and private mortgages:

1. Interest rate: Interest rates of private mortgages are considerably higher than traditional mortgages. But this varies on the lender and circumstances.
2. Down Payment: Unlike traditional lenders, private mortgage lenders will require a minimal amount as a down payment. Because they place emphasis on the value of the subject property over the borrower so that they are protected when the customer fails to make payments.
3. Length of the term: Traditional mortgages usually last up to 10 years, while private mortgages can range from six months to three years depending on the needs of the borrower.
4. Type of borrower: Traditional mortgages are usually provided to homeowners. Private mortgages are usually obtained by real estate investors who purchase properties with the intention of renovating and flipping them for profit.
5. Payment structure: Unlike traditional mortgages, where your monthly payments go directly towards paying off the principal, private mortgages are interest-only loans and only require monthly interest payments as a result.

Get in touch:

For further inquiries on private mortgages or to find out more details, get in touch with the specialists at 1onefund today. We are more than happy to help.