Should I go for a Private Mortgage?
A lot of factors contribute to difficulties in getting approval for mortgage loans from the banks. This has made private mortgage loans an option for the borrowers, especially because of the easy process involved in accessing them. You no longer need to go through the long period process of securing a mortgage loan from the bank that will often say no, with the availability of private mortgage loans.
What is a private mortgage?
A Private mortgage is a type of loan made available by private individual lenders for the burrowers. It is an alternative way of securing loans, considering the long processing period of traditional financial institutions such as banks and other lenders. A private mortgage is usually a short-term loan ranging from six months to three years. It could either be in hard currency or asset-based. Lender decision is usually based on the equity and value of the asset being put up for collateral. Qualification for a private mortgage loan is often easy because the real focus is on the value of the property or asset being put up for collateral. Should borrowers fail to pay, the property is returned to the lender, but it never comes to that – most lenders are highly flexible and will work with borrowers on multiple options.
Real estate investors always take the advantage of private mortgages, because they can access them without the financial documents usually required by conventional financial institutions. A private mortgage is very secure and the borrower can expect to pay flexible arrangements based on their situation.
Why choose a private mortgage?
You will probably ask this question; why do people go for a private mortgage loan instead of a traditional mortgage? There are various reasons why some people prefer private mortgages even though the interest is higher compare to traditional mortgage loans. Some of the reasons are;
- Effortless application process: Bad credit and poor financial history are not an issue. Private mortgage loan lenders don’t usually ask for the usual documents being asked for by traditional financial institutions, they generally base their decisions on the property used for collateral. If the lender feels the value of the asset used for collateral is sufficient to pay interest on the debt, the borrower’s financial condition will have nothing to do with the decision of the private mortgage lender.
- The time of closing the deal is fast: A traditional financial institution mortgage loan normally takes between forty-five and ninety days, they will check all the needful as well before they can grant you the loan, but a private mortgage lender can close the deal with the borrower in just ten days. The collateral is the main criteria used to determine the private mortgage loan eligibility.
- Plenty of funds are available: The borrower is able to access more funds with private mortgage lenders. Mortgages are easily available and based on the borrower’s personal financial means and situation. It is advantageous for the customer to borrow more and invest less capital from their own funds.
Typical terms of private mortgages
To avoid any argument in the future, it is important to have a written document that will serve as an agreement between the lender and the borrower. All agreements should be written clearly and duly signed by the two parties. With a well-written document, nothing of such will happen. A major factor is for the borrower to have his collateral ready, then the process can be smooth and very fast. At PrestoMortgages, we connect you with the most reputable private mortgage lenders in Canada; every step of the way is documented and easy to understand.
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