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Approaching Family

Many who find themselves in this position will approach family members for a loan. This can be a win-win situation where the lender earns extra interest and the borrower pays less than he would to private lending organisations. However, those contemplating an arrangement such as this must consider the impact that borrowing can have on relationships, especially if the situation arises where the borrower is unable to fulfil his obligations.
Always take into consideration the personal circumstances of the lender in relation to risk. Would failure to repay the loan result in personally damaging consequences. Is the money earmarked for retirement or for a child’s education?
If the lender agrees to the loan she should ensure that the property is secured by a lien, failure to do this can result in the borrower taking a mortgage which would receive first payment in the case of foreclosure. Before concluding the agreement, a tax consultant can help you with advice so that you stay on the right side of the tax authorities.
There should be a written agreement that covers all aspects of the loan. This should include payment terms, loan period, initial value, and the penalties for failure to make on time payments. The loan should be covered by collateral and this should also be carefully documented.

Remember that circumstances change and that borrowing and lending within any relationship can stretch the friendship to breaking point. If you are not willing to put the relationship at risk, there are other options.

Private First Mortgage Lenders

The private lending industry aims to fund those who find it difficult to get a conventional loan. Private first mortgage lenders use the property you purchase as collateral on the loan. This is why they can be more flexible when it comes to your personal circumstances.
Private loans are short term in nature. They are typically one to three years in duration. Borrowers taking these short-term loans should use the loan period to Improve their credit rating or increase their home equity. This way they can approach the banks for a conventional mortgage at the end of the term. If you have decided to go this route you should budget for the additional costs below.Private lenders have become conscious of the fact that conservative lending rules used by conventional lenders and banks exclude many potential homeowners who are actually able to pay back loans. Bear in mind, private mortgage lenders mostly take into consideration a property’s overall value and salability as opposed to merely the borrower’s credit history.

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The Costs of Private Borrowing

  • The costs to appraise the secured property. You will be expected to pay the appraisal costs when the appraisal happens so you should not arrange an appraisal before you find a lender.
  • Legal fees for both you and the lender will be for your account.
  • Interest rates in the private lending environment tend to be considerably higher than those charged by the banks. The interest rate that you are charged will be determined on your own unique set of circumstances. The higher your down payment and the better your credit rating the lower the interest.

Consider Your Options

Everybody needs a break sometime and most of us strive to purchase our own homes rather than renting from others. If the banks are turning you down, examine your options. Private lending is a vibrant and growing industry, and those in the industry are approachable, striving to ensure that borrowers receive the customer service that they deserve.

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Certified Mortgage Brokers
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Afton Jaskolski
2020-12-30

Getting a private mortgage was not easy to be honest, but at least with Mr. Leon it was doable. Thank you for your help!

Davin Mills
2020-12-26

There are a lot of mortgage brokers in toronto to choose from, I was a bit intimidated by that. Don't regret I picked CMB, they took the lead and made sure to cover all the bases

Tracy Wilhoite
2020-11-21

I was renting an apartment for a long time and finally decided to take a big step - get a mortgage instead. Team at certified Mortgage Brokers laid out various options for me. The actual process went smooth and quick, happy with my new home.

Ryder Turcotte
2020-11-16

My wife and I decided to refinance our mortgage and started looking for a mortgage broker in Toronto. There were so many options, so you can imagine how overwhelmed we got! After talking to Leon we decided to proceed with Certified, didn't regret that decision once. They always gave useful recommendations, were attentive, and constantly in touch. And most importantly (for us) they helped us to save some money!!

Lucy Zimmerman
2020-11-11

Vita was great. Helped my son with all the paperwork and got him very good interest rate. On the closing date called to follow up if everything went fine. Quite a pleasant experience. I would recommend this firm for anyone who is looking a mortgage broker.

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