What You Need to Know About Getting a Private Mortgage in Canada

What You Need to Know About Getting a Private Mortgage in Canada

What you need to know about getting a private mortgage in Canada. Canadian banks and most financial institutions consider a variety of factors when approving a mortgage. Apart from ensuring that the borrower has the capacity to pay, banks also check whether you have ongoing debts such as car payments and even student loans. But most importantly, banks check your credit score. If your score isn’t satisfactory, do not expect a bank to approve your mortgage. 

The good news, there is another way to get approved for a mortgage. A good alternative is to get a private mortgage. When you are declined by the banks, turning to a private lender makes as the guidelines and the requirements needed are not as strict as that of banks or other financial institutions. 

How Private Mortgages Work

A private mortgage is usually short-term — it can range from 6 months to a few years, depending on the need of the borrower. 

Unlike banks, private lenders do not typically check for credit scores. They do not pre-qualify you for a loan. As long as your property has good value and is in good condition, you will most likely be approved for a private mortgage. 

Some borrowers also consider using a B lender for their mortgage. Keep in mind that this type of lender can charge you very high-interest rates. There are ways to get approved for a mortgage quickly and without having to incur very high-interest rates. 

Working with someone who can spot the best mortgage solutions for your needs is the key. You can choose to fully pay your mortgage after 6 months or up to a few years. You may also have the option to renew your mortgage with your current lender. 

Do You Need a Private Lender?

Borrowers often go to banks first to get a mortgage or a refinance. They go through a long approval process in the hopes of getting approved for a mortgage. However, borrowers who have bad credit ratings will highly likely be disapproved. 

If you have been denied a loan from the bank, consider getting a private lender. You need a private lender if you have a bad credit rating or if your income isn’t fixed. Most banks often disapprove of borrowers who are self-employed as they may not be able to fully pay their mortgage. Private lenders are ideal for borrowers who need to have the funds right away or those who need funds for the short term. If there is a property you’d like to purchase and a bank wouldn’t fund it, consider a private lender. Let us know so we can assist you. 

How to Qualify for a Private Mortgage

After completing an application, it may only take less than a day to get your mortgage approved. So long as you have provided us with all the information needed then approval will be quick. In some cases, you may have to wait for 48 hours. Rarely does it take very long to get approved for a loan? Talk to us so we can provide you with the documents you need to prepare and so we can walk you through the entire process. 

With regard to the fees, there is only a minimal amount of fee when taking a private lender. Expect to pay just about 2% or a little more, depending on the complexity and the risk involved. The fees also depend on the loan amount. 

To increase your chances of getting approved quickly, do make sure that the property you are acquiring has great value and is in a good condition. The type of property and location are a couple of factors that private lenders look into. You will most likely be approved if there is minimal risk involved and if it’s in a strategic location. This is also to avoid foreclosure.

Also, you do need to prove that you are able to pay your mortgage. Unlike banks, there is no need to show a fixed income. So long as you are able to provide documentation that you are earning money, then it shouldn’t be a problem with the private lender. 

A few more tips to get approved for a private mortgage: 

1. Always work with a mortgage broker like LendToday as we have been in the industry for years. We have partnered with numerous private lenders in Canada. Rest assured, our team can connect you with a private lender that can give you better terms. 

2. Provide your mortgage broker with all the documents needed for the loan. As much as possible, you need to be honest. Lenders are able to spot discrepancies so make sure that you do not attempt to cover anything. If you have concerns, speak with your mortgage broker so they can help you resolve them. 

3. During the inspection, ensure that the property is in good condition. Dress it up to maximize the value of your property. 

4. Disclose any other properties to your lender. You can even use your second property as a cross-collateral to help lower your interest rates. 

Contact LendToday for your Private Mortgage

Applying for a mortgage doesn’t have to be stressful and overwhelming with our help. With our team of professionals and experts, we can make the mortgage process quick and even fun. We are committed to helping out borrowers in Canada get fast private mortgage approvals from lenders. Get in touch with us today.

David Jeffrey