Private Mortgages and
Refinancing Mortgages in Brampton
Before you take out your first mortgage
and eventually refinance a mortgage, you should consider the benefits of a private mortgage. Private mortgage
loans are interest-only loans in terms of one to years. Homeowners often opt
for private mortgage loans since they don't have to pay the mortgage principal
down, and instead just have monthly payments on the interest. Private lenders
can offer plans to borrowers that don't meet the strict criteria employed by
banks and conventional lenders. This often cuts out potential borrowers from
getting a loan even if they are more than capable of paying that loan back. One
of the primary differences in how private lenders evaluate assets is they
mostly base their decisions off the property's total value and market value
versus the homeowner's credit report.
Why Go Private?
Private mortgage loans are used for many
reasons. A lot of private mortgages are taken when a borrower needs a short-term
loan since processing and financing usually takes between two to three weeks.
Sometimes a borrower is looking to purchase an unconventional asset that most
traditional banks and lenders will not finance. Other times, it can be a bad credit report that causes banks to
turn down refinancing applications. Another reason is that some borrowers have
non-confirmable income that stops banks from approving loans.
Characteristics of a Private
The interest rates of a private mortgage often vary between
10%–18%. They are often used as a last resort for those with bad credit
history. Private mortgages can have
extra costs so be sure to speak to your Broker or agent to get an idea of what
these could be. Such fees can often be financed under the mortgage loan. The
terms can last somewhere between one to 35 years. There are three types of private
mortgage lenders: individuals, syndicate, and mortgage investment corporations.
Individual private mortgages have the means to lend funds and make personal
profit. Syndicate private mortgages are a collective group of investors who
pool together funds for loans. Mortgage investment corporations (MIC) are made
up of provincially licensed and registered real estate agents and mortgage
brokers in Brampton.
What Private Lenders
Private mortgage lenders require specific criteria for loan
approval because of the risk involved in case borrowers default on their
mortgage. To private lenders, the most crucial component in meeting the
criteria is the property type and value. The mortgaged property will be
appraised and must be in good condition in order to gain approval. The lenders
will also want to know that the borrower has the ability to repay the mortgage. Altogether, when planning on taking
out a mortgage or refinancing mortgages in Brampton, borrowers with unique
endeavors, assets, and incomes should not overlook private mortgages.