Why You Might Need a Private Mortgage
Many people, when they think about mortgages, think about traditional home loans that you might get through a bank or credit union. But the truth is that there are many other options for would-be homeowners to consider including private mortgages.
A private mortgage works the same way as any other mortgage except that the lender is a private individual or company. Because the lender is considered to be taking more of a risk, the interest rates are a bit higher and the terms tend to be shorter – nevertheless, there are some good reasons why you might need to get a private mortgage.
Easier to qualify for.
To obtain a mortgage through a federally regulated lender, you will need to pass a stress test which proves that you could still make your mortgage payments even if rates go up by a certain percentage. Private lenders are not bound by these same rules, so even if you can’t pass the stress test with a traditional lender, you may still be able to get a mortgage with a private lender.
Furthermore, to get a private mortgage you don’t need to have perfect credit either since private lenders will look at other factors than just credit score. Whether you’ve run into some trouble paying your bills in the past, or you’re self-employed and don’t have a lot of income on paper, private lenders have the ability to look at the bigger picture when they decide whether or not to approve you for a loan.
Shorter approval process.
If you are in a hurry – say there is a bidding war on the home you want – to get a mortgage, then opting for a private mortgage may be your best bet. Traditional lenders have a lot of red tape that they must go through before they can approve a mortgage and by comparison, a private lender is much faster.
If there is a deal that you have to act quickly on, you may need to get a private mortgage.
Smaller down payment.
Finally, you may need to get a private mortgage if you don’t have much of a down payment. Depending on whether you get CMHC insurance or not, you will have to put down anywhere from 5 to 20% down payment on a home to get a traditional mortgage. But private lenders can often give you a mortgage for 100% of the price of your home!
Contact 1Onefund Financial Today
If you are considering a private mortgage, the most important thing that that you find a good mortgage broker who can help you find a reputable private lender and the best private mortgage option for you. To speak with one of our brokers, give us a call today.