Recently Landed Immigrants

If you’ve been in Canada for less than three years, are employed with a full-time job, there may be options for you via the New to Canada mortgage program even without established credit. Explore the eligibility criteria and find more information about it in my blog on the subject.

Otherwise, those who do not fall under the New to Canada program’s guidelines may have a harder time securing approval for a mortgage, which is then when private mortgage lenders may come in handy. That said, some private mortgage lenders are sympathetic to these circumstances and may make exceptions. There could potentially be downsides, for instance, such as a higher required down-payment amount, so be sure to work with a mortgage broker who can walk you through all the terms and conditions and find an ideal private lending option.

Self-Employed Individuals or Those with Changing Incomes

Most financial institutions require two years of proven, relatively consistent income, but if you don’t hit the mark in terms of regular earnings, a private lender may be a better option. For example, if you’ve been self-employed for two years but don’t have a regularly strong income, then I’d recommend looking into private mortgage lender options. This may the case if you run your own business, freelance and work on a contractual basis, or otherwise. If your income changes regularly, or should you be your own boss, private lenders can sometimes effectively come to the rescue, whereas bigger banks otherwise must adhere to their requirements.

Individuals Earning Income in Another Country

Should you have a source of a foreign income, again, you aren’t earning within Canada. Some lenders may have solutions available to you, but there could be conditions including potentially higher down-payments (upwards of 35 percent in some cases). If you don’t meet the criteria with a traditional lender, then a private one may be able to accommodate for foreign income or allow for a smaller down-payment, helping to ensure you don’t miss out on your dreams of homeownership.

Although there are some possible benefits to private mortgages, there are also potential risks with these mortgages. Some rest can be: Higher interest rate. Typically private mortgages come with higher interest rates as well as the lender fees. Shorter terms: As these mortgages are sometimes with one year terms, you may need to re-qualify at the end of the year or pay another lender fee. Less ability to pay the mortgage off faster: If you are borrowing the money for a one year term, for example, if you have the ability to pay it off sooner some lenders do not have the option. Or, they would charge a penalty to do so.

A private lender mortgage is it worth reviewing if you are flipping a house and only need money for the short term. Also, if you have bad credit and feel some additional funds will help you get on the right track. For example, improving your credit score and paying off higher interest rate debts first.

Some other benefits include:

• Faster turnaround time: Second mortgages typically can be advanced in as little as 48 hours. When you cannot wait for a traditional lender review and approval, a private mortgage may be the way to go.
• Bad credit assistance: If your credit score is below traditional lending guidelines however you are still in need of money. A private mortgage may help you get through these times.
• A unique loan: Your reason for your financing may be quite specialized. With that, it may not be within a lender’s guidelines. Private mortgages can to help with the outside of the box lending. For example, it may be hard to secure a loan against an expensive personal item however you could get a private mortgage to finance the item.

A private mortgage is the mortgage that is not lent by a bank or traditional lender. The mortgage usually comes from a business or an individual. If from a business, typically the business has a collection of funds that is lent for private mortgages. Private lenders typically focus on providing financing for the short term. There are three main types of private mortgages that private lenders offer.

They are: Bridge loan A bridge loan is a short term loan that is typically needed when you have bought a new home before selling your existing home. Traditional bridge loan needs to have a firm sale and purchase agreement on the purchase and the sale. Without that traditional bridge loan is not possible. You can however explore a private mortgage for a bridge loan.

These mortgages are typically interest only and you can pay them back once your existing property sells. These loans come at a higher interest rate however even with a traditional bank, the interest rate on a bridge loan is higher than the interest rate on a regular mortgage. This may not be as much of a concern however as you are borrowing the funds for a small amount of time. Sometimes even for just a few days. When deciding if you should go this route, you can weigh the pros and cons of having the bridge loan versus getting the closing dates to align if possible. Bad credit mortgage If you have bad credit from having debts in collections, failing to pay your financial obligations on time and so on, a bad credit mortgage may be the option for you. These type of mortgages can be used for the consolidation. Also, just to help provide some financial breathing room.

Traditional lenders and banks have minimum credit score requirements. If you do not meet these requirements, then if still wanting financing, bad credit lender can assist. These loans come with higher interest rates due to the increased risk to the lender. Second mortgage A second mortgage is a mortgage that goes into second position behind a current mortgage you have. Second mortgages are sought for a variety of reasons such as financing a vehicle or your kids tuition. Also, borrowing equity to invest or buying a rental property and so on.

When the banks aren’t your best friends, it can feel as if you’re facing an uphill battle. But the battle isn’t lost – private mortgages are excellent alternatives for folks from all walks of life. It can be difficult to meet every specific requirement of a mainstream lender, so don’t feel bad if you can’t secure a preapproval from one. A private mortgage is exactly what it sounds like – the procurement of repayable funds from a smaller, private lender that has fewer clients. They can be useful when refinancing or renewing at the most competitive rate possible, typically consisting of shorter-term loans.

Instead, private lenders tend to focus more on what you’re buying rather than merely what your credit score is, so an instant no is less likely. You won’t see any 20-year amortization periods here, but you also won’t endure any headaches – I’ll be there to help you make sense of everything, from meeting private lender preapproval requirements to ensuring terms and conditions are borrower-friendly.