Piggyback Loans are Back with a Vengeance

private mortgagesPrivate mortgages like “piggyback” mortgages are back with a vengeance – but why? What the heck is a piggyback mortgage anyway? For years a single monolithic “jumbo” loan was the way to go, but now more and more borrowers are seeing that they can save big by going with 1 or 2 private mortgages instead of just one big conventional loan. Many save thousands of dollars in interest over the life of their mortgage, especially if they just don’t have the money for their down payment. Here we’re going to talk about how you can avoid the high down payments and usurious interest rates with a private mortgage instead.

What is Piggybacking?

When most people buy a home, they look for a single lender and a single mortgage – after all, it makes sense right? You wouldn’t want to end up with all that debt spread out across multiple lenders, and your bank is giving you a sweet deal, right?

Probably not. It’s been shown that lenders and financial institutions reserve the best deals for new customers – their current customers are already banking with them and making them money. But the CPA or cost per acquisition of a new customer tends to get them the better deals.

Instead of just getting one large loan from your lender, you can get two. One of these loans will help you get a larger down payment (capitalization) and look like less of a risk for the other mortgage you take out with another lender. You will have to work with two different lenders, but you’ll be able to have a lower interest rate and down payment across two mortgages than you would with one traditional jumbo loan.

What’s the Difference?

Jumbo loans cost more, period. A jumbo loan will, in general, cost about 1-2 points more in interest each year for the life of the loan. Smaller amounts of money borrowed usually give you a much lower interest rate.

If you do look into getting two mortgages instead of just the one, be careful. Some lenders will make you pay deferred fees if you pay off your mortgage early – they may also have penalties applied if you miss a late payment. But this is just another one of those reasons that you want to work with us!

Smaller loans also give you a higher LTV, or loan to value ratio. If you can get an 85% LTV across two loans, compared with 65% or less for a jumbo, you’ll be able to squeeze that much more value out of your equity in the long run.

It’s important to note that these are not bridge mortgages. Getting two mortgages to piggyback is a bit similar to a bridge mortgage, but you won’t have to worry about a fistful of lenders to deal with – just the two.

Have questions about your next mortgage or home equity loan? As Toronto mortgage brokers we help you look at a variety of lenders to understand which ones will be the right ones for you to do business with. It’s not hard to find a bad lender with a bad loan, but when you work with us you’ll find the one that’s right for you.

Are Private Mortgage Lenders a Good Fit for You?

private mortgagesEveryone has their own borrowing style, and every lender isn’t a fit for everyone; it goes without saying that you should speak with a Toronto mortgage broker before you decide to borrow! Here we’re going to talk about private mortgage lenders and how they work. Make sure that it’s a good fit before you borrow.

Conventional Vs. Private

In Canada the rate of private mortgages has skyrocketed, and with good reason. Instead of having to grovel at some bank and hope that one lender approves you, private mortgages give you the freedom to shop and find the right financing for your needs. You shouldn’t have to hope that a single lender will give you a good rate, and you don’t have to! When lenders compete you save.

When working with a Toronto mortgage broker you’ll be able to find the right fit for your borrowing needs. You’ll be able to choose from both private mortgage lenders and conventional mortgage lenders to see who will offer you the best interest rate. You’ll be able to separate lenders by different interest rates, mortgage terms, repayment terms, and everything else to make sure that you’re getting the best one that’s right for you.

How to Get a Private Mortgage

Private mortgages are best found through a Toronto mortgage broker. They’ll be able to help you find the right lender for your needs. You’ll have to fill out an application like you would with any other kind of mortgage, then they’ll be able to go to different lenders. You can ask that they query both conventional and private lenders if you like; this way you know you’re getting the full spread of options and will be able to put any offers from a private mortgage lender in perspective. This type of mortgage isn’t for everyone and you’ll need to be very careful when you borrow.

Use a Mortgage Broker

Whatever type of mortgage you’re trying to get, you’re going to want to talk to a Toronto mortgage broker! They’ll be able to help you explore different options in your area (if you’re not in Toronto talk to one near you). They don’t get paid until the home is closed, they work for you and not for the bank. They’re a perfect advocate for making sure that you get the right mortgage for your needs. Why get a pre-packaged deal when you can get the right one?

Mortgage brokers play a vital role in the process, but you will still need to get pre-approved and do your research to make sure you’re getting the right mortgage for you. It’s the largest debt that most Canadians will take on in their lifetime, and you want to know that you can repay this debt. Our grandparents didn’t have mortgage burning parties when they paid off the note for no reason! Ask for a GFE (good faith estimate) of how much this mortgage is going to cost you monthly and overall. Visit our private mortgage page to learn more!

Should you get a private mortgage?

private mortgagesIf you’ve had trouble getting traditional financing in the past, a private mortgage may be in your future! They’re not for everyone, but you may be surprised at how easy it is to get this kind of financing. Here we’re going to discuss the benefits of a private mortgage, all the pitfalls you can expect to face, and help you make sure that this is the right choice for you. Always make sure you work with a Toronto mortgage broker like us so that you know you’re really getting the deal that works best for you.

What is a private mortgage?

A private mortgage is just like any other mortgage – you’re still going to have a lender, interest payments, and the monthly bill you have to keep on top of. Doesn’t sound all that different, does it? The interesting thing about these kinds of mortgages is that you don’t have to worry about having the best credit. Sometimes we all make mistakes, things happen and these lenders understand that! Depending on who you work with, you’ll be able to get a great deal that you just wouldn’t get out of conventional lender.

What are the benefits?

The benefits are many – most people will notice that it is much easier to qualify for this kind of mortgage. Instead of having to bite your nails, hope that they pick you, and hope that they don’t ram you with a really bad interest-rate, you’ll know that you have somebody backing you. You still want to be very choosy about who you work with though! Just because a lender’s willing to do business with you doesn’t mean you should do business with them. You just never know who is genuine, and anything wants to steal your home right out from under you.

Are there risks?

Like every other kind of borrowing under the sun, there are risks associated with private mortgages. Many people end up with a lender that’s not all that great – then they end up losing their homes, filing for bankruptcy, and are still on the hook for all that interest. When you work with one of our Toronto mortgage brokers, you’ll get all the help you need to make sure that you mitigate all of your risks. Just because you have bad credit, and unstable employment history, or some other factor that makes you undesirable to conventional mortgage lenders doesn’t mean you have to get a bad deal. Let us help you make sure that this is the right choice for you.

Is this what you need?

You want to make sure that this is what you need to get a mortgage. You may be able to qualify for a conventional mortgage somewhere else, but you just have to find the right lender. This can be the hardest step your journey, and that’s why we’re here to help! Let us help you find the private mortgage that’s right for you today!

3 Things You Didn’t Know About Private Mortgages

private mortgagesWhen it comes to private mortgages you might think that you know all the facts, but you might not! Here we’re going to cover three interesting things that might make your life easier when you check them out, and you’ll be a little better prepared to get out there and start borrowing. Here we’re going to talk about how different inquiries to your credit report can affect you, if paying off old collections will hike your credit score and if your credit score really only changes once a month or not. Let’s get started!

“Paying Off Old Debts in Collections Will Improve My Credit Score”

This depends! If it’s a really old debt and it’s buried deep in your credit report it may actually not bear that much on a lender’s decision to give you a private mortgage. But if you start paying it off but you haven’t paid it off in full and you haven’t been able to get them to remove it from your report just yet, you may see a negative impact. Sometimes leaving things in the past is the best thing you could do – if you’re not sure what you should do, talk to one of our Canada mortgage brokers.

Your Credit Score Only Changes Every 30 Days

Totally not true! Credit reporting agencies actually have different reporting cycles – so if a company reports your debt at the beginning of the month another company could report your account activity in the middle of the month or at the end. Everyone is different and this is one area of your credit report that doesn’t deal in absolutes. You’ll want to be very careful about this part of things, and not obsess about checking it every part of the month. If you’re really worried about things, consider getting a subscription to watch your credit from one of the major Canadian credit bureaus like TransUnion.

“Multiple Inquiries from Lenders Will Wreck Your Credit”

You’ll actually have a window where this won’t be a huge problem when it comes to private mortgages (or any kind of mortgage) – but you will want to make sure that you’re applying for mortgages all within a 2 to 4 week window. This way you’ll be able to only have one mortgage inquiry on your credit report and the other 10 applications you put out won’t show up behind it. They’ll never know if you applied for one mortgage or 15, which is great for you.

You’ll want to work with one of our Toronto mortgage brokers when you’re trying to figure out how much you can borrow. After all, even a private mortgage can be hard to get if you don’t know what you’re doing. We’ll help walk you through all that paperwork and make sure that you understand all of your options. If you need help with your credit or if now is just not the right time for you to apply for a Canadian private mortgage, as your Canada mortgage broker we’ll help you figure things out.

If You Can’t Qualify for Traditional Mortgages, Private Mortgages May be the Answer

There’s nothing in the world worse than being denied for a mortgage – all of your dreams dashed. It hurts, but that’s not the end of it! With a private mortgage and us as your Toronto mortgage broker you’re going to get all the help you need to get approved. Turn your approval frown upside down and get the mortgage that’s right for you. Because, after all, it’s all about your dreams, isn’t it? You should be able to get the money you need to buy that home you’ve been dreaming of, and when you work with us you’ll get it.

What is a Private Mortgage?

The first thing you’re going to need to know is what a private mortgage actually is – instead of getting your loan from a bank, you’ll get it from somewhere else. Maybe it’s your grandmother, maybe you’re getting it from a loan company or a private person that just wants to make a little extra money from lending. Whoever you borrow from, you’re going to want to work with us as your Canada mortgage broker to get the most from your mortgage.

How Much do They Cost?

This depends on your credit, your income and how much you need to borrow. The average closing cost will be between $3,000 and $5,000, but you’ll also have to pay interest points on top of your mortgage (1% to 3%), plus any interest charged on your mortgage. This might sound like a lot, but for most it’s not too bad. Depending on your credit you could end up paying a lot more money than you think – but when you work with us as your Toronto mortgage broker you’ll be able to compare different lenders and what kind of rates you can get.

Why Are These Easier to Get?

Because they don’t have to satisfy a million shareholders, they’re usually a lot easier to get. A private mortgage lender is going to be much more flexible when it comes to bad credit or self employment. They can help you get the money you need to buy a home, they can give you better interest rates and they can even help you save on your monthly mortgage payment. It all boils down to who you work with to get these.

Is it Right for You?

If you’ve been trying to get a conventional mortgage, you may have had some problems. But what if there was a way to get the mortgage you’ve always needed, without spending all your money? With a  private mortgage you can save on your monthly mortgage payments, you can keep your interest low and you can get qualified even if you have bad credit. Don’t let bad credit or a unique financial situation get you down when you can find a way around it. Working with us as your Toronto mortgage broker will help you get the most from your next mortgage.

Visit our private mortgage page here, to learn more about how we can help you.

Who Are Private Mortgages Best for?

private mortgagesMortgages can be very difficult to figure out, after all it’s not a bank loan, it’s not exactly a traditional mortgage, but it does help you get the financing you need to buy a home. One of the worst parts of borrowing from a private lender is that you don’t really know the lender. Instead of trying to figure it out on your own, when you work with a Toronto mortgage broker like us, we’ll have everything you need to figure it out. Why struggle and try to get a good private mortgage lender on your own, when we can help you find a private mortgage, the one that best suits your needs?

There Are Few, If Any, Eligibility Requirements

One of the best reasons we love private mortgages that there are few, if any, eligibility requirements for borrowers. If you have bad credit, no credit, slow pays, no pays, or have had troubled past obtaining a loan or credit this could be a best bet to get financed to buy a home. If you do you have bad credit you could pay more in interest, so be careful.

You can fix bad credit by working on your credit report, building new credit accounts, making yourself more presentable to lenders. We can help you there, just talk to one of our Canada mortgage brokers.

Lenders Love Them

Lenders love private mortgages – they bring a decent profit, the risk of default is actually quite low – and if a borrower can’t repay, the lender can take their home. It’s a high earning well-structured debt that can be a big earner for the right lender. Like all other kinds of lending, it can be risky for both parties.

Understanding Private Mortgages Is Key

Many people enter into this kind of agreement without understanding what they’re in for. This is not free money! This is a secured debt, and if you can’t repay the mortgage you could lose your home. Just like a conventional mortgage, there are limits on interest and payments that a lender can charge you as a borrower.

Sadly, a lot of people just don’t know what they’re doing. They may end up with a private mortgage lender that’s unscrupulous, that doesn’t take the long view when lending money; even worse, they could lose their home to someone just because they didn’t read their contract. This is where we come in! When you work with us as your Toronto mortgage broker we’ll help you understand the terms the agreement.

Always Have the Option to Convert to a Conventional Mortgage

One of the most important things you should look at when looking for private mortgages is the option to convert. Sounds a little religious, and in a way it is! Being able to convert your private mortgage into a conventional mortgage will give you the control you need to stay above water on your mortgage.

Private mortgages can be a great help to people who need them, but you always want to make sure you’re getting the one that’s right you. We’ll be there to help you through every step in the process, so give us a call today and save!

How to Use a “Piggyback” Private Mortgage to Buy a Home

private mortgagesIf you want to buy a home but you don’t want to have to pay private mortgage insurance, a piggyback mortgage might be the answer. Say you have 10% down, but need 20%. What you can do is go to a private mortgage lender for the other 10% down and then go with your usual lender for the rest of the home. You can repay that 10% mortgage fairly quickly and you won’t be stuck in home owner limbo while you try and get up the rest of your down payment.

20% Down Payment Saves You from PMI

The larger your down payment happens to be the better. The minimum for most mortgages will be 20%; anything less than that you could end up stuck in the third ring of PMI. If you can go with a piggyback mortgage to cover the extra that you don’t have, you’ll be able to forgo PMI because the other lender isn’t having to put up more than 80% of the value of the home. You’re going to want to be careful about who you work with – when you work with us we’ll help you find the lender that’s best for your situation. Everyone’s different so you’ll want to be careful.

Why is PMI Mandatory on Conventional Mortgages?

PMI is an insurance policy taken out by your lender in the event that you can’t pay your mortgage in full – but unlike the insurance you take out for yourself, they don’t have to pay for it – you do. If you can’t pay your down payment or you just can’t prove that you’re solvent enough to buy a home, you’re going to end up with private mortgage insurance. You can try and get a private mortgage to cover the balance of what you owe, or you can go with a conventional mortgage lender for the majority of your mortgage and then get a piggyback one.

Why Pay More Than You Have to?

It’s important that you save where you can, especially when you first get your mortgage. At the beginning is when you have all the power and you’ll be able to get the most savings. Working with us as your Canada mortgage broker we’ll help you understand where you can save and what you can do to maximise your savings.

Always Work with the Right Lender

It all comes down to working with the right lender – it can be hard to find one that isn’t out to take all for your equity! When you work with us we’ll help you explore all of your options and to find the lender that’s right for you. With so many lenders out there competing for your business, there’s no reason for you to pay too much, so don’t! Call today and see what we can do, after all you only get one chance to get the best deal, so get yours today!

Visit our private mortgages page to learn more!

How to Get a Mortgage for a Rental

private mortgagesIf you want to buy a rental property but you don’t have 100% cash up front, you’re going to need a mortgage. You can go the conventional route with a bank, or you can look for a private mortgage lender to help you get there. Either way, you’re going to need to know what documents you need, research banks and lenders, find a real estate agent and nail down what kinds of costs you’re going to face before you buy the home. It’s important that you go in prepared – if you leave anything to chance you can easily end up with a foreclosure and bad credit.

How Much Can You Spend?

Before you even start looking at private mortgages, you need to know what your budget is. You don’t want to go off the maximum mortgage amount either; look at the down payment you’re willing to save up and multiply that by 5. You’re going to need 20% down to buy a home, even if it’s a rental or income property; if you can’t get that much money up you’re not going to do well when investing in real estate. It never hurts to make sure that you have as much liquid as possible to qualify for your mortgage application once you put it in either!

Start Looking at Lenders

Once you know your working budget, you’re going to want to start looking at different lenders. Don’t only look at private mortgages, make sure you look at conventional lenders too. You never know where the best deal is going to come from – after all there are so many lenders out there that are competing for your business. Make the most of your money while you have it, because good investments can be harder to come by than capital. From here you’ll want to be pre-approved for a mortgage; this just means that you’re ready to buy a home, but you’re not under any obligation to do so just yet.

Talk to a Realtor and a Mortgage Broker

Once you know how much you can spend and have a good idea of the lenders you want to work with, it’s time to talk to a realtor and a mortgage broker. They’ll be able to help you find a home and know if the mortgage deal you’re getting is actually the one that’s right for you. Getting a few expert opinions on the matter before you buy a home is the best way to go. Once you’ve found your dream home and a good conventional or private mortgage lender, it’s time to fill out the application.

Fill Out Your Loan Application and Wait

Filling out your loan application shouldn’t be too hard, work with a mortgage broker to make sure you’re doing it right. Now you’ll just have to wait for a couple weeks or a couple months to find out if you qualify. Once you know, you’ll be able to move on to the closing stage. If you were already pre-approved for your mortgage, you’ll be able to skip this step and move ahead!

Fill out are fast and free loan application today!

Do You Need a Private Mortgage?

private mortgages in torontoFiguring out if a private mortgage is the right choice for you can be difficult, but that’s why you need to understand your options. Just because you have bad credit or no credit at all doesn’t mean you have to go the alternative financing route. Private mortgages in Canada carry the same risk as any other kind of mortgage; what you’ll want to be careful about is how much you borrow and how fast you’re going to pay off your loan. Here we’re going to go over a few different things you need to know about financing your home, so let’s get started!

What Are Private Mortgages?

Private mortgages give you the flexibility you need to borrow, but they also give you the security of a traditional loan. These are made by lenders just like a regular loan, but instead of going to a bank you’ll need to go to a Toronto mortgage broker to get in contact with different lenders. You don’t want to do this part on your own, and a mortgage broker is only paid after you’re satisfied with your choice of lending and everything is closed out. If a mortgage broker tries to get you to pay up front, find another. Their fee comes out of those fun closing costs you pay when ownership of the home is transferred to you.

How Are Private Mortgages Different from Regular Mortgages?

A private mortgage is different only because of who is lending the money and who is borrowing it. Many traditional lenders won’t loan money to people who are self or seasonally employed; you may be retired or you may run your own business and have a hard time proving income. You may have a bad credit history you’re working on. Either way, you’re going to need a mortgage broker to help you through the process and to get the financing that you deserve to get you on your way.

Do You Need a Private Mortgage?

Situations vary greatly from person to person, but it never hurts to explore your options! You’re going to want to go over the paperwork with someone who knows what they’re doing, and this is why you need a mortgage broker. You shouldn’t have to go it alone, and with the right help you won’t have to.

How Much Do Mortgage Brokers Cost?

They work on a nominal fee; this can be 1% of your mortgage or it could be $300. It will range from broker to broker and you’ll want to be careful about selecting your broker solely on the basis of cost. You won’t always get what you pay for when it comes to mortgage broker, so make sure you ask around and look at reviews of different companies online. This way you’ll be able to maximise your chances for getting financing; then you’ll be able to get your private mortgage and save money all at the same time!

Do You Need Private Mortgage Insurance?

private mortgagesMany people don’t know what private mortgage insurance is, much less if they’re going to need it or not. If you’re thinking about getting a private mortgage, talk to us first; we’re experienced Toronto mortgage brokers who can help you find the right financing at the right price! Here we’re going to go over everything you need to know about private mortgage insurance and if you will need it or not.

Why Private Mortgages?

Private mortgages can help people with poor credit, no credit, or those with unique circumstances get the financing they need to buy or refinance their home. There’s nothing new about private mortgages and they’re virtually identical to any other kind of mortgage; instead of getting your financing from a bank you’ll get it from a private individual or company. The interest rates can be a little higher on these types of loans, and that’s where we come in. When you choose us to help you get a good Canadian private mortgage, you’ll be able to get the mortgage for you. Always choose a mortgage broker when looking at this kind of financing!

What is Private Mortgage Insurance?

When you get a private mortgage, you may not be able to get enough money up for your down payment. For conventional mortgages the down payment amount can be as low as 5% interest, but this can vary wildly from one private mortgage lender to another. This will usually stay far below 10%, unless your credit is a problem. We can usually help you figure out where you rate on the credit scale so you can take proactive steps to solve your credit problems before they become a problem for you in the loan process.

But if you can’t meet your down payment requirements, you’ll be required to purchase private mortgage insurance. This means you can put down less of a down payment, but until you’ve paid off 30%+ of your home you will be paying insurance premiums. After this point, you can talk with the lender and have the insurance waived and get out of paying it.

Will You Have to Pay Private Mortgage Insurance?

It’s always a good idea to get pre-approved for your Canadian mortgage (private or conventional!) and this way you’ll know how much financing you’re approved for. From this, you’ll be able to figure out what your 10% – 20% down payment will be like, and you can either save up or decide to just go with private mortgage insurance. Right now mortgage rates in Canada are at the lowest they’ve been, and probably will be, for many decades. You’ll be able to get a good interest rate while it’s still available, and pay mortgage insurance for a couple of years. In most cases it will pay to just do this and save on interest later.

If you’d like to learn more about what we can do for you, contact us today! We can help you sort out what type of financing will work for you.