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Private Mortgages for Vaughan Homeowners

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Private Mortgages for Vaughan Homeowners

There are many reasons why a homeowner in Vaughan might want to obtain a private mortgage. Banks are notoriously regulated, and new, more stringent guidelines for lending continue to be imposed on a regular basis. This means that homeowners who want to access funds based on home equity often have their applications refused by traditional lenders. Of course, financial struggles in the past, such as bankruptcy filings or a history including debt consolidation can work against prospective borrowers. But new regulations involving tighter restrictions on self-employed clients mean that even more people are ineligible for conventional bank products. If you own property in Vaughan and have been turned down by your bank, consider a private mortgage.
There are two entities involved in the process of securing a private mortgage: the licensed private mortgage broker and the lender.

Private Mortgage Brokers

To become a private mortgage broker, one needs to undergo training, write exams and participate in an apprenticeship. Most times you can have an initial consultation with a private mortgage broker for free, but if you continue to work with him/her, you usually have to pay a fee. These professionals are knowledgeable about your options and have strong relationships with private lenders.
When you’re choosing a broker, do your research. Ask friends and family for recommendations or see if your bank can refer you to a private mortgage broker. Use online resources to ensure that brokers are members of professional associations. Meet with prospective brokers to see if you communicate well and if you feel like a productive relationship can be formed. The right broker will match your needs to the right lender – which can lead to a win-win situation for everyone!

Private Lenders

Private lenders are funded by individual investors or groups of investors. Some larger lenders have several different funding sources or include a pool of mortgages called a MIC (mortgage investment corporation), while smaller investors might simply lend out their own money.
These lenders tend to put emphasis on the property and the amount of equity that a borrower has in the home. Rather than scrutinizing the borrower’s history and financial situation, the private lender will often ask for a home inspection and appraisal to be done. The primary concern for the private lender is usually the condition of the property, the location of the property and how easy it will be to sell if the borrower defaults. Private lenders are usually willing to assume more risk than financial institutions.
Of course, assuming more risk means that private lenders usually ask for a higher interest rate. Make sure that you are familiar with current interest rates before signing any documents. You may find that the rate requested is only slightly higher – or even lower – than comparable bank rates.
There can be other costs associated with private lenders, including: lender fees, mortgage broker fees, legal fees and the cost of an appraisal if a recent one isn’t available.
A private mortgage is usually a short-term arrangement, most often one to two years. It’s intended to be a bridge to more traditional financing.
Contact a broker today and find out more about how a private mortgage can secure you the funds you need.


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