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The problem is that once you have a bad credit score, it can take a while to correct and it can influence your ability to access a mortgage for the purchase of a home.
Banks insist on a down payment of twenty percent of the mortgage, and many would-be investors find themselves in a position where they have saved the down payment but are still unable to get a loan due to a bad credit history.

Private Mortgage Lender’s Interest Rates

If you have been turned down by the prime mortgage lenders, rest assured that there are organisations that make it their business to offer mortgages to people with shaky credit records. There is of course a cost. Higher risk means higher costs to service your debt, so the bottom line is that you will pay more interest.
Interest is inversely correlated to risk, so you can reduce this expense by offering to make a larger down payment on the investment. To the investor this means that you have a bigger stake in the asset and therefore will work harder to ensure that the investment is paid off.
The major banks charge a rate 3.49% for mortgages, institutional lenders who service those with lower scores charge 5.49%, and private lenders who generally finance second mortgages charge between ten and fifteen percent.
Obtaining funding from private investors normally takes a lot less time than the time taken by the banks. Private lenders will often complete the process within a week or two, compared with the forty-five days that conventional banks take.

The Criteria for Granting the Private Mortgage

The criteria for granting the private mortgage is the value of your home rather than your personal credit rating or your ability to prove your average income. This is because the private mortgage lender secures the loan with your investment as collateral.
They will insist on a careful appraisal of the property that you wish to finance, and will require a rating of average to good before they will approve the mortgage. Private mortgage lenders will cap their loan at between seventy-five and eighty five percent of the value of the property, depending on the risk.

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Plan for the Longer Term

Private Mortgages are short term loans, extending over periods of six month to three years, so this is a short-term solution which must be accompanied by a longer-term plan. During the term of the loan you should work at improving your credit score or increasing the equity of your home, so that you qualify for a conventional loan at the end of the term. The banks will only refinance the home to a maximum of 85% of the value of your property.
Credit providers often use the Gross Debt Service Ratio to determine how much of your income will be used to service the debt, and will normally approve a ratio of as much as 35%, but you should feel comfortable that this ratio will fit your budget.

Problem solved

If you have been struggling to get a conventional mortgage, applying for a private mortgage may be the answer to your dilemma.

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Sean Hammond

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.

Ronald McDonald

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

Shannon Jones

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!

Glen Plummer

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.

Colleen Power

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.

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