Private Mortgage Lending
One of our Niche Mortgage Products
Few Mortgage Brokers really take the time to get to know and understand Private Mortgage Lending. Often times they may know one or two local lenders with interest rates over 10%. What we do differently is we have taken the time to get to know all the Private Mortgage Lenders from coast to coast, learning what their client profile is, and interest rates and fees. Where a local private mortgage lender may have an interest rate of 10.75% - 14.00%, we have made arrangements with lenders from across Canada with rates starting as low as 8.95%.
How we can Help Clients with Bad Credit
Private Mortgages are generally short term mortgage loans ranging from six months to three years in length. Quite often they are interest only to reduce the payment amount, but some also include principal and interest. Private Mortgages are designed for situations where an odd property is being purchased, or there are credit problems and a bank won't approve the client, or the client is in foreclosure, or late on their mortgage payments and needs to bring their mortgage up to date, consolidating debt, property taxes, CRA tax, Collections, Judgments, Consumer Proposals and Bankruptcy. Private Mortgages can be first, second, or even third mortgages, and work for purchases, refinances, rental properties, and commercial properties.
What are the Top Reasons for Using Private Lending
-Your credit history stops you from being approved by traditional banks and credit unions
-You cannot prove your income
-You want to buy an unusual property (bad condition to be renovated, bare land, mixed use)
-You need a quick approval
-You need a short term solution
Types of Private Lenders
-Individuals - Individuals willing to loan their personal cash seeking a return on their investment
-Syndicate - A group of individuals who pool their money together
-Mortgage Investment Corporation (MIC) - A group of investors, typically larger corporations than individuals or syndicates. Also often have the lowest rates
Characteristics of a Private Mortgage
Interest Rates 8.95% - 11%*
Lender/Broker Fees 1-5%**
Term 6-36 months
Amortization 25 years or interest only
*on first mortgages, situations may arise such as second mortgages where rates are higher. On accepted credit, rates subject to change without notice. **Fees are approximate but may change based on situations and size of loan
Criteria of a Private Mortgage
Private Mortgage Lenders are mainly interested in the property. Generally they allow up to 75% of the homes value to be borrowed, in some cases up to 85% (at a higher rate). Because they have a large equity position, many private lenders do not ask for proof of income. Just an appraisal to confirm the value of the property. Private lenders will want to see a copy of the clients credit bureau, however they will lend in virtually any credit situation.