If traditional lending institutions such as banks and credit unions have turned you down for a mortgage, it doesn’t mean that you have to give up on your dream of becoming a homeowner. Instead, you should contact your mortgage broker and talk to them about whether getting a private mortgage may be the right choice for you.
What is a private mortgage?
Simply put, it is a home loan or mortgage that is provided by a private lender (either a company or individual) as opposed to a more traditional lender such as a bank. A private mortgage works essentially the same way that a traditional mortgage does – you are lent a certain amount of money to pay for your home and then you make payments with interest on it – usually on a monthly basis.
Typically, the term on a private mortgage is shorter (one or two years compared with five on a typical traditional mortgage), and because private mortgages are considered to be a higher risk for the lender, the interest rate is usually a little higher.
Reasons to get a private mortgage
There are many reasons why a homeowner might have a private mortgage. These include:
● Poor credit prevents them from getting a traditional mortgage.
● They are purchasing a non traditional property and their bank won’t provide a mortgage.
● They are looking for a shorter term mortgage (possibly because they plan to move in the near future).
● They are self-employed and cannot get a traditional mortgage (usually because they can’t prove their income or their income fluctuates.)
● They are new to Canada and have no credit history here.
The importance of working with your mortgage broker to get a private mortgage
By far the best way to get a private mortgage is to work with your mortgage broker. Mortgage brokers have contacts with many private lenders and they will work to find you the best lender and mortgage terms for your situation.
Since some lenders will not even work with home buyers without a mortgage broker, working with your broker ensure that you get access to the best lenders available. It also helps ensure that you are steered clear of any unscrupulous lenders who might be looking to take advantage of you!
Contact AKAL Mortgages today
If you think that a private mortgage might be the right choice for you, then contact Akal Mortgages today to speak with one of our brokers.
When we say YES! We stand behind our promise®™
