If you are thinking about purchasing a home, congratulations! This is a big step in your life and for many Canadians, their home will be the biggest and most important purchase in their lifetime. It can be both exciting and scary. And if you have started shopping around for a mortgage, you know that there are many different kinds of mortgages to choose from and you may be wondering how to make the best choice. One of your options is to get a private mortgage but before you sign that contract you need to decide whether a private mortgage is really the best option for you.
Why do people choose private mortgages?
People choose private mortgages for a number of reasons. Some people may have had a sketchy credit history and may be unable to obtain a mortgage through a traditional lender. Others may be self-employed or be new to the country which can also cause them difficulty in landing a traditional mortgage.
Still others, may have friends or family members who have offered them private mortgages and who may be able to get a more attractive interest rate by choosing a private mortgage over a traditional one.
Whatever the reason you are considering a private mortgage, it is important to understand both the pros and cons so you can make an educated decision.
What is a private mortgage?
A private mortgage is just that. It is a loan offered through a private individual or company rather than through a traditional lender like a bank. Some of these lenders offer private mortgages for a living while others are simply ordinary people who are doing it to help out a friend or family member.
What should I consider before accepting a private mortgage?
If you are considering taking a private mortgage from a friend or family member, you definitely need to think about how doing so could affect your relationship – especially if you somehow become unable to pay in the future.
But regardless of the source of the loan, you definitely need to make sure that the mortgage papers are drawn up properly and that everything is legal for tax purposes. For this reason, it is always advised to work with a professional mortgage broker if you are offering or taking a private mortgage.
Interested in learning more about private mortgages? Then contact Akal Mortgage today at (416)-621-1300.
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