What is a private mortgage?
Most mortgages require evidence that you can repay them and typically banks and lenders are interested in your income and credit score. If your income, credit score and debt to income ratio are favorable then you should be approved for a mortgage.
The approval process with traditional lenders can be a time-consuming however. Even those with favorable finances can find the process takes a few days from the lenders review, to the document review, to a possible appraisal on the property and so on.
As private mortgage lenders lend based more on the collateral, they are less focused on a client’s current finances.
Private mortgages are typically offered for shorter term such as one or two years. There are also open options available that can be paid out at any time. The shorter terms can assist with giving more opportunities to reevaluate your financial situation to see if there is the opportunity to move you to a more favorable lending solution and with that one with a potentially lower interest-rate.
Also, as private mortgages typically come with higher interest-rates it is best to not carry the debt for a long period of time.
Why get a private mortgage?
Even with a higher interest-rate private mortgages still do have their benefits, here are a few of these benefits.
When is it a good idea to get a private mortgage?
A private mortgage makes sense as a mortgage for the short term. For example, for those flipping properties or those who need to pay some debt or borrow money in a timely manner.
Reasons behind getting a private mortgage certainly change from person to person.
What are the downsides of a private mortgage?
The downside of the private mortgage typically is the costs associated with setting up and/or carrying the mortgage. Private mortgage lenders typically have set up fees as well as an appraisal is usually needed and a lawyer. Also private mortgage is typically come at a higher interest rate than traditional mortgages.