Oftentimes, the strict policies that lenders have toward borrowers prevents prospective home buyers from getting the mortgage loan they need. When this happens, private mortgage lenders can offer the flexibility and opportunity to get on the path toward homeownership. But before we dive into the benefits of choosing a private mortgage lender, there’s one question you’d probably like answered:
“What is a private mortgage lender, anyway?”
In short, private mortgage lenders in Toronto are individuals and businesses who offer mortgage loans outside of the traditional lending institutions. They operate on different terms than traditional lenders, like banks, and will work with those who might not qualify for a mortgage with their bank.
Reasons to Get Help from a Private Mortgage Lender
Have you been turned away from your bank or credit union when trying to apply for a mortgage? You certainly aren’t the only one! Many people who have had no success with trying to obtain a mortgage through their banking institution turn to private mortgage lenders for help. A bank may not approve your application if:
- You do not have a well-established credit history.
- Your credit history is less than stellar.
- You are self-employed and do not have the type of employment forms (like a W-2) the bank needs.
Private mortgage lenders tend to be quite a bit more flexible with those who fall into the above parameters.
If it is your intention to buy the house and then “flip” or sell it, private mortgage lenders can be a big helping hand. Private mortgages tend to have significantly shorter terms than conventional mortgages, but this isn’t a problem if you intend to sell the house within the allotted timeframe.
Many houses that are in need of extensive renovation cannot be acquired through traditional lenders. This is not the case with private mortgages, however. A private mortgage can make it possible for you to fix up the house and then sell it at a higher value.
Shorter Approval Time
Where it could take a month or two to get approved for a conventional mortgage, private mortgages can be approved in a matter of a couple weeks. The reason for this is the fact that conventional mortgages are more complicated to acquire and require more from the borrower.
Private mortgages are still serious commitments despite how much easier it is to acquire them than conventional mortgages. They aren’t for everybody, so make sure to assess your situation closely before making this – or any other – choice in regard to getting a mortgage.