Private Mortgage in Vancouver
Your bank isn’t approving your mortgage? We got you covered!
What is a Private Mortgage?
Private mortgages provide an alternative source of financing for borrowers who may not qualify for traditional bank loans or who require more flexibility in their borrowing arrangements. Private mortgage lenders are typically individual investors, a group of investors, or a private lending company rather than a traditional financial institution like a bank or credit union. Private lenders view mortgages as investments, which often translates to a more lenient approach towards credit checks and background assessments. Securing a private mortgage is often quicker and less complex than qualifying for a traditional mortgage loan. Just keep in mind that those advantages are accompanied by increased interest rates, fees and possibly greater risk.
Opting for a private mortgage could be a viable choice if you are purchasing an unconventional type of property, do not plan on holding onto the property for an extended period, or have an alternative source of income.
The interest rates offered by private mortgage lenders are generally higher compared to those offered by traditional lenders and have shorter terms, usually ranging from six months to three years. This is mainly due to the fact that private mortgage are interest-only payments. In an interest only mortgage setup, none of your payment contributes toward reducing the principal amount owed, unlike in a standard mortgage where the total amount decreases over time.
Are Private Mortgages a Good Option?
Despite the negative reputation, private lenders can be a great option if the mortgage you are approved for fits your needs. Below are some examples where private mortgage lending can be useful:
You urgently need a mortgage approved.
You have very poor credit and traditional lenders, including sub-prime lenders, will not approve you.
You have income that cannot be verified, such as cash jobs.
You have down payment that traditional lenders cannot verify.
You need a short-term loan because you plan on selling your home as soon as possible.
Traditional lenders are not approving you because of your property.
Private Mortgage Pros and Cons
| Pros of a Private Mortgage | Cons of a Private Mortgage |
|---|---|
| Very fast approval. | High interest rates. |
| Minimal documentation needed. | Additional fees charged for setup and commissions. |
| Access to flexible terms not provided by traditional lenders. | Short term, interest-only payment loans. |
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