Not able to finance your dreams with a regular mortgage? A private mortgage might be the answer. But how hard is it to get one?
Private mortgages have always been considered a secondary choice, but with the strict new rules that came into force on the 1st of July 2021, it may be the only choice for some borrowers.
What are private mortgages?
Private mortgage loans are options provided by private lenders who are not bound by the restrictions that banks and other such financial institutions are. They are usually used for short-term loans and can provide benefits on interest and down payments.
With the new rules put in by the Canadian government, demanding higher credit scores, better debt to income ratio and setting a limit on down payments, private mortgages are becoming the go-to for self-employed borrowers and other borrowers who find it hard to show financial stability.
Looking for a private mortgage? Connect with One Mortgage Group now.
How can you get a private mortgage?
The process of getting a private mortgage is not very different from the regular mortgage process. However, the lender is focussed more on the property and its value when compared to your finances. Hence, you may require less documents and have to meet lower criteria.
So what do private lenders look for?
1. Property value: Most private lenders are interested in the type of property you are looking to purchase and the value it will hold. If there is a reasonable profit, you could get benefits on your interest rate with ease.
2. Loan to value ratio: A loan to value ratio is the value of your home minus the amount you have borrowed. If there is more that 80% – 85% in borrowings, lenders may not be willing to invest. Mortgage brokers can help you find lenders who may be willing to do so, since they have a wide network. This also pays a role in determining your down payment.
3. Income: While it is not a deciding factor, private lenders do have to look at your ability to pay back the borrowed amount. They assess the risks here and provide your interest rate based on the same.
Is it easy to get a private mortgage in Canada?
When compared to the strenuous process that banks and similar financial institutions put you through, getting a private mortgage seems like a cake walk. The right mortgage broker can also help you find a lender who can provide you with deals that are beneficial. The mortgage broker can also guide you through the process and help you avoid hassles.
Find the right private lender. Connect with mortgage experts at One Mortgage Group today.