It seems that not many are aware of the benefits of private mortgage and how they can be used by almost anyone. Private mortgages are truly an under used option by mortgage applicants perhaps because some may not know that it can be the best option for those who have a high possibility of being turned down by traditional lenders or those who just want a bit more flexibility than what a bank can offer.
Alternative Option for Those Turned Down By Strict Lending Rules
Because more regulations are presently being imposed on potential homeowners, it is understandable that not all who apply will qualify. People who have no guarantor or those who have no means to pay a higher interest rate are likely to be turned down.
As it is, an example of how things can change would be the rules imposed in October 2016 courtesy of the Federal Government. It made private lenders change how they give private mortgages to people.
How to Apply for a Private Mortgage
Applying for a private mortgage can be a tricky process. You can try to meet and approach private lenders by searching on the web or perhaps by word of mouth as private lending is a legitimate business. The thing is that each private lender has their own regulations and stipulations so shopping around may not be as easy as most may think.
Advantages of a Private Mortgage
Because not everyone has a strong credit rating, a stable job, big home equity, and more, applying for a bank loan is not for everybody. Big banks usually turn down borrowers who do not check enough of their boxes. This is why private mortgage financing is such a great alternative for a lot. People who can reap the advantages of a private mortgage include:
- Foreign investors
- Anyone looking to flip a property
- Applicants who owe taxes
- Self-employed people
- Applicants who are rebuilding their credit score
- Those who are looking for equity for other ventures such as starting a business
Disadvantages of a Private Mortgage
Your property matters a great deal when applying for a private mortgage. This is why people with properties in undesirable locations may be rejected by lenders. Another disadvantage of a private mortgage is that the fees because this can vary so much between lenders. Note that private lenders pay 1% to 5% of the borrowed amount to the broker that made it possible, hence, the discrepancy. Another possible disadvantage is you choosing one that would be nearly impossible to pay within your means and present financial status. Extra care is truly needed.
Still unsure if approaching a private lender or applying for a private mortgage is for you? Talk to us at Homebase Mortgages so we can walk you through what you need to know. We can also help you get approved as well as review the terms for you so you can be sure that you end up with a private mortgage that will serve your interests. Contact us at your earliest convenience!