If you are having difficulty in qualifying for a traditional mortgage, getting a private mortgage in Woodbridge may be a solution to help you get into or stay in your home.
In the past private mortgages have accounted for approximately 4-5% of all Canadian mortgages, however with stricter lending rules such as the mortgage stress test now in effect, that number is on the rise.
A private mortgage is typically interest-only loans, but because the lender is taking on more risk interest rates can be quite a bit higher (ranging from 10-18%). Usually, they are shorter-term loans than traditional mortgages (1-3 years). If you are getting a private mortgage because you don’t have good enough credit for a traditional mortgage, it is a wise idea to work on improving your credit over the term of the mortgage.
Private mortgages in Woodbridge can be the solution when:
- The borrower doesn’t have enough credit to get a mortgage through a traditional lender.
- The borrower is self-employed and not able to verify their income.
- The borrower is at risk of foreclosure or is in arrears for their property or income tax.
- The mortgage is for a mobile home or for a micro-condo (under 600 square feet).
- It is for a second mortgage or mortgage on an investment property.
Private mortgages can be beneficial to those with poor credit because they typically require much less documentation than traditional mortgages and the approval process tends to be more flexible. As long as the borrower has a large enough down payment, they can usually get approved for a second mortgage.
When a private mortgage in Woodbridge may not be right for you:
As noted before, private mortgages come with risks and are meant to be short-term solutions.. Before getting into a private mortgage, you should have a plan in place to build up your credit so that you will be able to switch to a conventional lender.
If you do not see yourself as having the ability to do this within the next few years, then obtaining a home loan from a private lender may not be appropriate.
If you are considering a private mortgage in Woodbridge is it best to sit down with a qualified mortgage professional who can help you weigh the pros and cons and determine whether or not this might be the right solution for you.
For more information on private mortgages, or to schedule a consultation, contact me today.