Private mortgages are short term secured loans. They typically run for terms of between one and three years. The borrower is not required to pay back the principle amount. The monthly repayments cover only the interest with the principle recovered at the end of the term. Private lenders have taken advantage of a gap in the market. They realized that the stringent lending criteria employed by conventional banks had left many with no recourse to the banks. Many of these would-be lenders could nonetheless afford to repay such loans. Private lenders look at more than just the credit history of the borrower. They are equally concerned with the market value of the property that will secure the loan. Private lenders often specialize in certain sectors of the market. Because of this your broker can connect you with a private lender who best suits your needs.
There are many circumstances where conventional lenders will not approve you for a mortgage. This is when a private mortgage lender could save the day. You would need a private mortgage lender in the following situations.
Private mortgages carry more risk for the lender.
They, therefore, attract higher interest rates. Currently interest rates on private mortgages range from 10% to 18% depending on the financial circumstance of the borrower and the characteristics of the property.
Rates may change in response to changes in economic conditions.
Interest rates also depend on which type of lender you use and the rate of return that the investors require.
Because you’ll pay higher interest rates for a private mortgage, you would only go this route if you cannot get loan approval from a conventional bank or bad credit lender.
When you borrow from a conventional lender you don’t worry about the fees as the lender pays the commission. With a private lender, however, the borrower pays the fees. There is also a setup fee for the private loan. Overall the fees come to approximately 1% to 3% of the borrowed amount. Fortunately, you can include the fees in the mortgage.
It takes significantly less time to get approval of a private loan than a conventional loan. Approval will take between two and seven days. You’ll receive the funds in a matter of two to three weeks. The private lender is in the business of short-term loans. They will prepare you to change to conventional lender so that you can repay the capital on the private mortgage at the end of the term.
...pick the one thats right for you.
|HELOC||4.2% (prime + 0.25%)|
First National Financial
Street Capital Bank
|5 year variable||1.7% (prime - 0.35%)|
|3 year variable||2.6% (prime + 0.15%)|
|Line of Credit||Starting at 3.00%|
|Equity Loans||Starting at 5.99%|
|Private Mortgages||Starting at 5.99%|
I had to port a mortgage to a new condo, Leon had excellent knowledge to get me through the approval process. When the bank made an error, Leon was quick to contact them to make sure everything was done right and on time. He is very professional and courteous and I recommend his service to anyone who wishes to apply for a mortgage.
Giving them 5/5 stars. Massoud helped me with my mortgage and he never missed a beat. He made the process very straightforward as a first time home buyer. Shopped around for other mortgages but he was always the first to get things for me. Highly recommend him
I was looking to renew my mortgage and my previous lender was less than willing to do anything to keep my business. So I started to look for another brokerage to do business with and Certified Mortgage Broker stood out purely based on my interactions with Massoud. Massoud was professional and clearly had a keen sense of customer service; which I make a high priority when doing business with anyone since I'm in the customer service business myself. Peter rolled out the red carpet for me, walked me through my options, inquired about my plans with my current property, give me opinions and facts about rentals in the area, sales/purchases. In some respects he gave me more information about real estate than my real estate agent has!
Selling and buying a home is a stressful experience and Leon with CMB in North York took all of the stress out of arranging the financing. He was very professional and clear about what I needed to provide to him. He used this information to arrange the best mortgage option on our new home, arranged the bridge loan to cover the closing period differential, and arranged closing out the mortgage with the previous lender.. Our experience with Leon is far better than the local in-person brokers that we contacted previously and Leon has helped us with a mortgage renewal in the past with the same excellent experience.
Leon returned my called from a missed call within 15 minutes of my call and I left no message. Leon and his team were fantastic. Even with the money issues we had Leon made me feel important and valued as a person.
…by providing award winning customer service to each and every single client.
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