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HOW TO GET A PRIVATE MORTGAGE IN CANADA

Are you worried about getting a mortgage in Canada? Do you keep on facing problems while applying for a mortgage from a bank for any financial institution? If so, you need to know about the private mortgage and private mortgage lenders in detail. Private mortgage lenders are the individuals you call angel investors who can provide you with a system when regular financing options don’t work in your favour. You can take a private mortgage in Canada from private mortgage lenders who quickly offer short-term financial solutions to their clients. They are one of the best alternatives to strict financing options in several situations.

Who are private mortgage lenders?

More specifically, private mortgage lenders can be an individual or an organization that helps you with short-term credits by investing their surplus cash to the clients. You can make money from them for property purchase, ensuring you have a property as collateral. There are many suitable private mortgage lenders in Canada. However, you have to connect with a highly knowledgeable and experienced mortgage broker to break the deal. The best part about taking mortgages from private lenders is that they look beyond your bad credit histories. Also, they are not much interested in your income and so try to help you with potential finance options. Moreover, they don’t follow a rigid process like traditional banks and sometimes meet the borrowers personally to assess their suitability. Although you can expect a high-interest rate from private mortgage lenders, their processing of getting a loan is much quicker and hassle-free.

When to take the assistance of private mortgage lenders?

Here is a list of some ideal situations when the candidate should look for a mortgage from private lenders:
  • You are looking to purchase any unconventional property which a bank or any other lending institution is not in favour of financing.
  • You require a short-term loan for a few years only.
  • There is a need for quick financing, and you can’t wait for a lender approval process.
  • Your credit score is not good, and most regular lenders have turned down your application for a mortgage.
  • You are self-employed, or your income is not verifiable which is acting as the major roadblock in your way of getting a mortgage.


Who can private mortgage lenders help?

You cannot please all the people in this world. However, it is easy to convince private mortgage lenders to help you with your financing problem. They will be ready to help you in the situation when traditional banks refused to do so. If you have an unlimited Canadian credit history or unverifiable income, it’s better to get your mortgage approved by private mortgage lenders. Let understand it in detail.

New Immigrants

If you are a new immigrant and don’t have any credit history, you probably have to start from scratch. Also, new immigrants have no Canadian employment history. So, they are not able to qualify for mortgages from banks or other big lending institutions. So, newcomers to Canada can always look for a private mortgage from private lenders who will not ask for your employment history but try to help you purchase your dream home.

Self-Employed

If you go for taking a mortgage in banks, you may be required to show 2 years of employment history as proof of your steady source of income. It is not possible if you have a regular income or unverifiable income. Therefore, private mortgage lenders can help you overcome the challenges you face because of fluctuations in your income.

Foreign Income

Anyone with a foreign income can also find it hard to qualify for a private mortgage, mainly if the income is not easily recognized. Different banks ask for additional down payments for people with foreign income, which can sometimes not be a feasible solution for them. Therefore, they bend towards their Angel investor. Only a private mortgage lender can assist you in this case by providing you with a loan in a short time without involving you in a lengthy documentation process.

Bad Credit Mortgages

You can look for private mortgage lenders if you have a bad credit score or no credit history. You don’t have to worry about your credit history because the private mortgage lender will be more interested in knowing how much equity you have in your home instead of looking at your previous credit score.

Private Mortgage Lenders vs. Banks

Banks are the body that accepts the deposits from the customers and lend the money to the customers at a higher rate of interest. It is not that easy to get loans from banks. Moreover, any financial institution or bank lends the money based on a healthy financial relationship with the customer. They check the last financial track of the customer with the help of a credit bureau, and if the credit score is favourable, only they lend the money. On the other hand, private lenders are the business undertaking that private investors manage. They are the ones who do not conduct that complicated verification of the client while lending them the money. They require the necessary documents to process the amount to the customers.

Advantages of Private Mortgage

1. Short and Quick Approval Process: The process of getting the mortgage from the private lender is much more accessible, short, and quicker than the other governing bodies in Canada. Banks follow a proper procedure and check the customers’ credibility before lending money, and it takes time as well. The private lenders take a few hours and lend the money after viewing the property. They lend the money they think that can be quickly recovered from the client.

2. Qualify Easily:

When it comes to private lending or mortgage, then the private lenders shows much more interest in the customer’s property rather than the profile of the customer. The rate of interest of the private lenders are a bit high so they are least concerned with the credit score of the borrowers and the income of the borrowers as well as they know that the property they are mortgaging has value in the market. Homebuyer, who has been facing difficulty in getting the loans from the banks due to some of the other reasons, can connect with the private lenders, where they can get the amount in easy process and in lesser paperwork and time.

3. Avoid The Stress Test:

One of the best things about private lending is that they do not do any stress test or take out the credit history of the borrowers. They are mostly interested in the property of the borrowers.

4. Debt Consolidation:

Debt consolidation is a process in which you can come out of your overdue bills and payments at the earliest with the help of private mortgage companies. If you have multiple bills and over dues, then private mortgage companies help you to consolidate your debts and pay you the balance equity on your home. This will make you pay your dues more easily.

5. Financing For A Purchase Plus Improvement Or Renovation:

Sometimes, banks or other lenders charge a higher rate of interest on lending the money for renovation or they deny to pay the amount. Under such circumstances, private mortgage companies become the upfront support for the people who need finance for purchasing plus improvement or renovation.

6. Short Term Loan And Bridge Loan:

If you talk about a short term loan or a bridge loan then, private mortgage lenders are the best option in the country. If you want to buy a new home and you are having an older home with you and you need short time finance, then a private mortgage is the best option for you to borrow the money in Canada.

HOW ARE THE TERMS SET BY PRIVATE LENDERS DIFFERENT FROM OTHER LENDERS

If you want to borrow the money for a shorter period, say 6 months to 3 years, then private mortgage lenders are the best ones you have as compared to the conventional lenders. You can expect some extra amount of fees over and above the rate of interest they are offering. If you are taking a loan from private mortgage lenders, then they will take almost 3 to 4 days in processing the loan. There are many private mortgage companies available in Canada. The intermediaries or the broker house like Home Mortgage Care, help the client to find the best and the most convectional, private mortgage lenders in the country. The brokers also take the minimal amount of fee from both the parties but they support their clients to get the mortgage loan at the earliest and the best rate of interest.

What criteria will Private Lenders look at?

Every lender has some of the other criteria for lending the loan to the borrowers. If we talk about the private mortgage companies, they have strict guidelines than the other undertakings. Property type and value. This is one of the major factors which a private lender considers before lending the loan. You are taking the loan from the private mortgage lender just because either you are not having a good financial background or you are a having a bad credit history. In such circumstances, the private lenders show complete interest in the property and they do good research before they lend the amount to the borrowers.

Income.

Based on your income, the lenders lend the money. If you work on a commission basis or are self-employed then your income is not fixed. Under such circumstances, the private lenders take an average of your income and then lend the amount. If you are salaried and have a fixed income then that is considered as your income on which amount is to be lent.

Down payment.

Private lenders can offer you finance up to 90% value of your property and 10% would be the amount if you have to pay. If you have more money to pay as a down payment for the property you are buying, then it is a positive sign for the private lender that they are lending the money to a healthy financial borrower.

Equity.

If you want to take a loan against your property, then also private lenders may lend you up to 90% of the value of your property. But it is not fixed. At the time of the mortgage, private lenders first examine the value of the land or the property and then they see the credibility of the clients and after the evaluation, they lend the money.

Frequently Asked Questions

In what case, private mortgage lenders can offer special mortgages? Private mortgages are the lenders who offer the loan for a shorter period to the customers where they have the power to adjust the rate of interest. They are much more flexible in offering the lending rates depending upon the equity rate of the property.

Can you borrow more from private mortgage lenders?

If we talk about the Private mortgage, yes they can offer a higher lending amount as compared to the banks. Banks are the governing body who considers many things before lending the amount such as the value of the property, customer credibility etc. But Private mortgages are the ones who can offer you more than the banks taking into consideration the value of the mortgaged property.

When can you expect to get a mortgage from a private lender?

It takes as long as a week to sanction the amount in your bank account.

When is the best time to go with a private mortgage?

If someone is having a bad credit score and a poor bank history, for them private lenders are the best and last hope. But if home buyers are getting the loan from the banks then they must go for them as compared to a private mortgage.

Look forward for a private mortgage from the professionals

If you are searching for private lenders in Canada and if are finding difficulty in getting the conventional amount from banks, then Home Mortgage Care will help you get the best private lenders in the country. We understand the problems of our clients and help them to get the best possible rates of their property mortgaged from private lenders.