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7 Jun

What are Private Mortgage Loans?

General

Posted by: Darick Battaglia

What are private mortgage loans?

Private mortgages are short- term, interest-only loans, ranging in length from 1 to 3 years. Interest only loans do not require homeowners to pay the mortgage principal down, and instead only require interest payments each month.

Private lenders have realized that conservative lending guidelines used by banks and conventional lenders exclude many individuals who are in fact able to pay back loans. Most importantly, private lenders take into account a property’s overall value and marketability as opposed to simply the borrower’s credit history. Why would I use a private mortgage lender?

You want to purchase an unconventional property that a prime lender or bank won’t finance.

You need fast financing and don’t want to wait for a long approval process.

Your bad credit history means you are being turned down by conventional lenders.

You only need a short term loan.

You have nonconfirmable income that is preventing you from obtaining a traditional mortgage. Private mortgage funds come from just that. People like you and me with money or access to money that is ready to invest.

If you are interested in investing in a private mortgage you  can take your savings or borrowed funds and lend it to a home owner as an investment.  This can also be done through your self directed RRSP.  The paperwork must be facilitated through a licensed mortgage broker or lawyer. This is not something you are permitted to arrange on your own as the correct paperwork and registering of mortgage charges are necessary. Interest rates can typically range from 7 to 15 percent depending on the risk.

<p>As an investor you are entitled to review the application, credit bureau, appraisal, interview the applicant peronsally, review employment, even inspect the property if you wish, to aasist you in your final decision to determine a rate or your overall interest in the deal.

contact your favourite mortgage broker to help learn more.   www.darick.ca