Private mortgages are becoming more and more common today for many home owners who are looking for alternative lending solutions. Canadian Mortgage services deals with a variety of different private lenders who are able to assist our clients in ways that traditional lenders are not. Here are a few benefits of privately funded mortgages:
- Credit Flexability – Private lenders are more flexible to borrowers with bad credit. These lenders are usually more forgiving of blemished credit and tend to focus more on the security of the equity available within the property
- Fast Funding – Privately funded mortgages are completed quicker than traditional mortgages because the process involved in getting an approval is not as vigorous.
- Less Documentation – Privately funded mortgages often require less supporting documents that traditional mortgages because the focus of the loan is based on equity available within the home. Lenders still require some supporting documents but not as much as that compared to the banks
- Interest only payments – Privately funded mortgages are usually interest only loans which allows the borrow to free up some cash flow for other needs. Since the mortgage is not amortized with a principle pay down, the extra money is available to the borrower.
- Short term solutions – these mortgages are usually based on one year terms and are great for borrowers with short term goals. In fact, they help many borrowers with immediate funding for things like weddings, renovations, investments, etc. In addition to this, these mortgages are usually open and can be repaid at any time.
- Higher Loan to value – Privately funded mortgages have a greater risk tolerance and are willing to provide loans as high as 85% to the value of the home.
- Higher Debt Ratio’s – These mortgages are not too stringent on debt ratios of the borrower and there is not an absolute ratio that would prevent the borrower from obtaining the loan. As long as the client is in a position to honour payments, the approval will be considered.