If you apply for a traditional mortgage with a bank and are turned down, your quest for home ownership does not necessarily need to end there. A private mortgage may be a fall back position for you.
If you apply for a traditional mortgage with a bank and are turned down, your quest for home ownership does not necessarily need to end there. A private mortgage might be a good fall back position for you, and our team of professionals at FamilLending.ca can help you explore your options.
A private mortgage works in much the same way as a traditional mortgage but the money comes from a private source. Often private lenders are more willing to accept a level of risk, and are therefore more likely to lend money to someone with a bad credit rating. Some examples of people who might make use of a private mortgage include:
- Self Employed People: If you are self employed it can be more difficult to produce verification of income acceptable to a bank. Often self employed people have fluctuating incomes. You might earn enough over the course of a year to cover your mortgage payments but your income might fluctuate from month to month making it more difficult to get approval on a mortgage from a bank. A private mortgage might be the answer.
- People With Poor Credit: Private lenders are more likely to approve mortgages for someone with a bad credit rating, or no credit rating.
- High Risk Property Investments: Sometimes banks view neighborhoods where home values have dropped or have not increased as a bad risk. A private lender is often more willing to take a closer look at properties deemed high risk by banks. Sometimes a private lender has more flexibility and is better able to share your vision, identifying the value in a property that a bank can overlook because their procedures, policies, and rules are more rigid.
- Home Equity Debt Consolidation: A private lender has a lot more flexibility than a bank and is far more likely to consider financing that will allow you to consolidate your debts through a second mortgage.
- Bridge Financing: If you’ve purchased a new home, but have not yet sold your current home or haven’t been paid for it yet, you may require bridge financing. A private lender is more likely to approve bridge financing than a bank.