Most people in Mississauga, given the choice would likely choose a traditional mortgage over a private mortgage. But still there are some very good reasons as to why one might opt for a private mortgage. In this article, we will discuss the reasons why one might choose a private mortgage.
What is a private mortgage?
Let’s start by defining what we mean by a private mortgage. A private mortgage is a mortgage offered by a private company or individual. In the case where the mortgage is being offered by a company, it is usually offered as an investment – the company earns interest from the mortgage borrower.
In the case of a private mortgage that is offered by an individual, it too can be as an investment. But it can also be offered as a favour. Some private mortgages are offered by friends of family members of the borrower in order to help them out and these usually have very low interest rates.
No matter what type of private mortgage you choose however, you should always work with a qualified mortgage broker to make sure that everything is done properly and legally.
Reasons to choose a private mortgage.
There are several reasons why a homeowner might opt for a private mortgage. These include:
- Poor credit – this may be the most common reason for choosing a private mortgage. If you have poor credit, you won’t be able to get a traditional mortgage from a bank, but since private lenders are able to look at the bigger picture, you are more likely to get approved for a private mortgage.
- Self-employed – Sometimes people who are self-employed have a difficult time proving their income. They may have a lot of tax write-offs that affect they way their revenue looks on paper and this can make it difficult for them to get approved for a conventional mortgage.
- Unconventional property – Most A lenders won’t grant you a mortgage on an unconventional property such as a tiny house. If you are looking to purchase a home that is a little out of the ordinary, you may need to turn to a private lender.
- Short-term – Most traditional mortgages are for terms of five years. But what if you want only a very short-term mortgage – say, one year? In this case, it might be your best bet to opt for a private mortgage.
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If you are considering a private mortgage in Mississauga, we can help. Contact us today to learn more.
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