Qualifying for a bank mortgage is like trying to trying to place the moon in a tiny cup for people who do not have near perfect financial records. And it is not just them. This also affects individuals who’ve only recently moved to Canada as well as people who are self employed. What’s there to do?
If you’re one of the above or have credit problems, there are still mortgage solutions for you. Sure, banks may not be best option more so with the new mortgage rules for this year; but a quick talk with mortgage specialists will let you know that you may just be an application away from alternative mortgages and private mortgages.
Financing with a Private Mortgage
Using a private mortgage for financing is especially helpful for the following people:
- Private investors
- Self-employed people
- Non-Canadian residents
- Foreign investors
- Those with a bad credit
- Those planning to but small condos or micro condos that are under 600 square feet
- People who have a commercial or construction loan
- People whose property is under foreclosure
- Those who still owe taxes to the Canada Revenue Agency
- Business people who want to start a business with the use of equity takeouts
- Those who are not fully paid for their property tax
It should be noted that banks are not the place to apply for a private mortgage for most people. Fortunately, professional mortgage brokers can help with connecting borrowers with the right individuals and businesses that can lend private mortgage or a helping hand (financially speaking).
Applying for a Private Mortgage
Getting an approved application for a private mortgage is subject to a lot of factors. You should know that if you’re planning to purchase property, then you will have to get financing for the 15% to 20% down payment that you need to initiate your purchase. You should also know that your mortgage rates will vary based on whether you’re buying your first, second, or third real estate property. As for payments, you can opt for interest only payments or make it an open loan so you’ll have the freedom to just pay all your mortgage early with no penalty.
Find a Good Mortgage Broker
Know that your private mortgage will have certain fees. This is how the broker gets paid and how some of the paperwork is paid for. The fee can be as little as $500 or as high as 5% of the amount you borrowed. This fee will vary from one mortgage broker to another.
A good mortgage broker should help you plan an exit strategy in the event that you want to move to a lower-rate mortgage. That’s what we do at Homebase Mortgages because we believe in helping you each step of the way. We want to protect your best interests because that’s how we ensure that you’ll be able to do financially better in the long run.