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
However, there can also be some "cons”. These 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.
- 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.
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!