The Ultimate Guide to Private Mortgages
If you are a Canadian that has ever had a dream of owning your own home, but your mortgage application was refused by the bank, you may want to consider researching private mortgage lenders. The federal government has implemented new rules for mortgage borrowers, which has increasingly made private mortgages a more popular option amongst homebuyers and property investors. It’s quite simple, banks are strict and it’s often hard to get approved.
Banks, Private Lenders & Your Down Payment Options
As of last month, the average cost of a home in Mississauga rose by 15.9 percent to $653,861. Even if you are investing in property and get approved by the bank, can you come up with a $130, 772.20 for your 20 percent down-payment? If not, then a private mortgage is definitely a great choice for you to consider. Private mortgage brokers operate differently than banks and other lenders because their money derives from investors and/or groups of investors, creating more sources for funding and producing a lower down payment requirement of only 5 to 10 percent. This makes it easier for potential homebuyers to not only come up with enough funds to pay down, but to also get approved.
Banks tend to scrutinize buyers more, whereas private lender focus more your character, ability to make your payments, how you will use your funds (when approved), and the actual property itself, including:
- · Condition
- · Location
- · Other selling aspects
Are You Considering a Second Mortgage?
If you are considering taking out a second mortgage your home through the bank, you should reconsider. Why? It’s not generally something that a bank would consider approving. Applying for private funds is basically your only option here.
The Next Steps to Private Mortgages
Don’t be discouraged if your mortgage loan is delayed or denied by the bank, you have bad credit, or your income cannot be verified. You always have other options. Here are a few great tips to help get you start on the path to your dream home:
- · Go with a short-term solution such as a private mortgage and put yourself in a better position for the future
- · Don’t be afraid to ask questions
- · Work on a secure, short-term financing plan with your mortgage broker
An experienced mortgage broker knows the ins and outs of the mortgage industry and they can certainly prove to be a very useful resource throughout your buying process, so use them to your benefit.
Debt: Bankruptcy, Consumer Proposals, Credit Cards, Debts & Scores
In 2014, 64,839 consumers filed for bankruptcy and 53,211 filed consumer proposals to avoid bankruptcy. Aside from this, credit card debt accounted for 5.4 percent of total household debt and 52 percent of Canadians had credit card debt. Incidents such as bankruptcy, consumer proposals and credit card debt in 2014 place 2.85 percent of Canadians in the extreme risk category and 21.4 percent in the moderate risk category, based on their overall credit scores. With almost a quarter of the entire Canadian population in the alarming to concerned categories, it’s made it extremely difficult for buyers to get approved for both first and second mortgage.
Whether you have bad debt, a bad credit score, filed bankruptcy, or a consumer proposal, you always have options at your disposal. Make the most of your mortgage broker and get in touch with AKAL Mortgage brokers today!
"When we say YES! We stand behind our promise".