AKAL Mortgages

Akal Mortgages
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Lic 10845, Independently Owned & Operated
Akal Mortgages
Book An Appointment
Lic 10845, Independently Owned & Operated
Akal Mortgages
Book An Appointment
  • 238 Britannia Rd E, Mississauga, L4Z 1S6
Akal Mortgages

Should You Get a Private Mortgage?

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If you would like to purchase a home, one of the first steps you will have to take is to secure a mortgage. Unfortunately, getting approved for a traditional mortgage is not something that everyone can do easily. If you have poor credit, are self-employed, or you are a newcomer to Canada, you may not qualify for a mortgage at your bank or credit union. You may be able to qualify for a private mortgage however – and perhaps you are wondering if a private mortgage is a good choice for you.

What is a private mortgage?

Very simply, a private mortgage is a home loan that is offered by a private lender (either a corporation or an individual) rather than by a traditional lending institution. Typically, a private mortgage has a shorter term and a higher interest rate than a traditional mortgage since lenders consider these types of loans to be a little riskier. Furthermore, many private mortgages are interest only loans.
At the end of your term on a private mortgage, you will have the option to renew the mortgage or to pay it off in full (the same options that you would have on a traditional mortgage).
Is it better to get a private mortgage now, or wait until I can qualify for a traditional mortgage?
Ultimately, this is up to you. There are however, some very good reasons why you might want to consider getting a private mortgage now.

Home values continue to rise

It is no secret that home prices in Canada have been steadily and dramatically rising over the past several years. If you cannot currently get a mortgage because you cannot pass the federally mandated mortgage stress test, you may be tempted to put off buying a home for a few years while you save up a larger down payment.
This however could end up being a big mistake. During the time that it takes you to save a larger down payment, home prices will most likely continue to rise. So the extra money that you saved may not put you any further ahead.
On the other hand, if you purchase a home now using a private mortgage you will be a homeowner right away. And in the few years you would have taken to save a larger down payment, you will have built up equity in your home.

A private mortgage can help you improve your credit

Perhaps you are not able to qualify for a traditional mortgage because of poor credit, and you would like to build up your credit before you apply for one. But did you know that a private mortgage can actually help you do that?
As long as you are able to make the payments on your private mortgage, you will be building a credit history and repairing poor credit from the past. At the end of the term of your private mortgage, you may have even built up your credit enough to qualify for a traditional mortgage.
Contact Akal Mortgages today!
Do you think that a private mortgage might be the right choice for you? If so, contact us today and speak to one of our brokers.

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