Private mortgage is a short term secured loan. 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||2% (prime - 1.2%)|
|3 year variable||2.1% (prime - 1.1%)|
|Line of Credit||Starting at 3.00%|
|Equity Loans||Starting at 5.99%|
|Private Mortgages||Starting at 4.99%|
Getting a private mortgage was not easy to be honest, but at least with Mr. Leon it was doable. Thank you for your help!
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
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.
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!!
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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