Private Mortgage Lending in Canada
A private mortgage is an interest-only, short-term loan used to purchase real estate. Because private mortgages are provided by private persons or institutions, they may be easier to get.
To purchase a home, the majority of Canadians living in Toronto, Brampton, Mississauga, Peel Region require a mortgage. However, receiving a mortgage approval is a difficult procedure. You must be in excellent financial standing and fulfil income, debt, and credit score criteria. So, what happens if you’re not prepared? In some instances, a private mortgage may be a viable option for achieving your home ownership objectives.
What is a private mortgage?
A private mortgage is a loan provided by a person or organization to homebuyers who have been unable to get a regular loan from a financial institution such as a bank.
If you have a low credit score and can’t get a regular loan due to the requirements of other lenders, you could consider a private mortgage. Private lenders, on the other hand, are more inclined to view the mortgage as an investment, and hence are less stringent when it comes to credit history and background checks. If you’re buying a distinctive sort of home, don’t expect to hold it for a long time, or have a non-traditional source of income, a private mortgage may make sense.
How to get a private mortgage?
Individuals, syndicates, and mortgage investment firms all issue private mortgages. An expert mortgage broker may be able to connect you with a trustworthy private lender, or you may do your own research.
While obtaining a private mortgage is often quicker and easier than obtaining a bank loan, you must still fulfil some eligibility conditions. To be eligible for a private mortgage, you must have the following:
- Proof of income:You’ll need to show that you have enough money to cover your mortgage payments. If you’re self-employed, this can be difficult, and you may be requested to present additional documentation.
- Down payment: Typically, 15% of the purchase price is often required to obtain a private mortgage.
- A sellable Property:If the borrower fails to make payments, the lender will want to be able to seize and sell the property in order to reclaim their investment.