Have you had trouble getting a traditional mortgage in the past? Perhaps because of this difficulty you thought to yourself that you might never become a homeowner. The good news is, that many Canadians can still qualify for a mortgage even if their bank or financial institution has turned them down. The solution for many is a private mortgage.
What is a private mortgage?
A private mortgage is simply a mortgage that is offered through a private company or individual rather than through a traditional financial institution such as a bank or credit union. Anyone – even a friend or family member – can offer you a private mortgage, but they are most often obtained through professional private lenders that work with your mortgage broker.
Why get a private mortgage?
The main reason for getting a private mortgage is the inability to get approved for a traditional mortgage. Reasons for this could include having bad credit, being self-employed, or even being new to the country.
Other reasons for getting a private mortgage may be that you need to get the approval quickly or you wish to get a mortgage on an unconventional property.
The advantage of working with a private lender is that the lender has the freedom to look at a number of factors including your earning ability and how much the property is worth. Traditional lenders like banks on the other hand, need to work within a very strict set of criteria, so it can be more difficult to quality for a mortgage with these types of institutions.
Can I get a private mortgage with bad credit?
In most cases, yes! In fact, you can even use your private mortgage to start repairing your credit. As you pay off your mortgage – as long as you make the payment on time – your credit score will gradually start to improve.
Are there any drawbacks to getting a second mortgage?
The main disadvantage that you may come across with a second mortgage is the fact that the interest rates on these loans are usually a bit higher than that of traditional mortgages. That being said however, if a private mortgage is the only way that you can purchase a home, the extra you might have to pay can be well worth it – especially if home values continue to rise the way that they have been.
Contact AKAL Mortgages today
If you would like to learn more about private mortgages and see if this is the right solution for you, we would be happy to help. Call us today to speak with one of our brokers.
When we say YES! We stand behind our promise.®™