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Private Mortgages Help Ottawa Homeowners

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Private Mortgages Help Ottawa Homeowners

 

If you own a home in Ottawa, you are fortunate! The nation’s capital is a charming and picturesque city with a solid economy and a rich cultural landscape. Ottawa’s high standard of living, diverse population and friendly neighbourhoods make it a great place to live. Homes in Ottawa continue to increase in value, although housing prices are not as high as they are in many parts of the country.

 

However, the current economic climate has been difficult for many Ottawa-area homeowners, and if you are one of them, you may need to increase your cash flow – in order to pay down debt, cover tax or mortgage arrears or to invest in a child’s education. Unfortunately, many homeowners who attempt to access funds based on home equity have their applications refused by conventional lending institutions. Banks have a stringent set of criteria that must be met in order for them to "greenlight” an application, and if your numbers don’t add up, it’s likely that a bank will turn you down. However, there are alternatives to traditional banks. Private mortgage brokers and lenders are an important part of Ontario’s financial landscape.

 

Pros and Cons of the Private Mortgage

 

There are several differences between a bank mortgage and a private mortgage.  The "Pros” for the borrower include:

  • Time. Private mortgage lenders have a smaller pool of money than banks do. When that money is idle, it’s not bringing these individuals and groups any return. So the approval process for a private mortgage tends to be very quick, and funds are usually made available within two to three weeks. Borrowers must also act quickly, as lenders don’t like to wait long after an offer has been made.
  • Risk. You may be seen by the banks as high-risk, due to different factors. You may have damaged your credit rating, or you may currently owe money. You may be self-employed; banks often have difficulty in fitting self-employment into their guidelines since it’s difficult to predict future income. The good news is that private lenders are more willing to fund based on home equity, rather than insisting on a specific configuration of numbers.
However, there can also be some "cons”. These include:
  • Interest Rates. Most private lenders do charge a higher rate of interest. Often, the rate is close to the bank’s rate, and, occasionally, the private mortgage rate is lower than that charged by conventional institutions. Be sure to check interest rates online to see how what you are offered compares to what’s available.
  • Period. Private mortgages are usually of shorter duration than traditional mortgages, which can last for decades. Private mortgages typically have one- to three-year terms.
  • Fees. The lender may charge processing fees . In addition, you will need to work with a private mortgage broker in order to negotiate your mortgage, and these professionals may charge a fee.

Finding a Private Mortgage Broker


A good private mortgage broker will help you to package your proposal so that it’s attractive to prospective lenders, match your needs with appropriate lenders, and help to negotiate a customized mortgage that works for both parties. Initial consultations with these licensed professionals are usually free – so call one today and learn more about private mortgages!

 

 

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