Many homeowners in Milton are turning to private lenders when other lenders such as banks turn them down for a mortgage. And while poor credit is one reason that might cause someone to seek out a private lender, it is not the only reason. Many Milton homeowners who are financially responsible and well able to pay back their loan are still turned down by the big banks. It may be because they are self-employed and don’t show a lot of income on paper or they may be retired and unable to pass the new mortgage stress test even though they have a lot of capital.
Private lenders are often able to take the time to look at the bigger picture. Rather than simply looking at an applicant’s credit report, they evaluate their whole situation including the value of the property in order to assess risk.
What is a private mortgage?
Like the name suggests, a private mortgage is a home loan – but instead of the loan being held by a bank, it is held by a private corporation or individual. Unlike traditional mortgages, private mortgages are interest-only loans. They tend to have much shorter terms than traditional mortgages as well – usually one to three years.
When should you seek out a private mortgage in Milton?
If you are in any of the following circumstances, it may be appropriate to seek out a private lender:
- You are seeking a loan on an unconventional home such as a tiny home (banks won’t finance unconventional properties.)
- You require financing in a hurry and don’t want to wait for a long approval process.
- You have poor credit history.
- You only require a loan for a short period of time.
- You are self-employed and cannot proof a large enough income to satisfy a traditional lender.
- You are unable to pass the mortgage stress test.
What can I expect with a private mortgage in Milton?
When you apply for a private mortgage in Milton, you can generally expect the approval process to by quite fast – usually in less than a week. The interest rates on private mortgages are higher than the interest rates on traditional mortgages, but the higher interest rate is often well worth it if you are looking for any of the benefits stated above.
If you do decide to move forward with a mortgage from a private lender, the goal should be to build up your credit and move to a traditional mortgage within 18 months. This is beneficial to the borrower who will then be able to lower their interest rate as well as to the lender who will then be able to collect a return on their investment.
Contact me today!
If you are interested in working with a private lender in Milton, I can help! Contact me today for a consultation.