Private lending is a tool that many mortgage brokers don’t access as it feels far too complicated and remains somewhat of a mystery. But a good mortgage broker will always know ALL the options for financing your mortgage. At GLM Mortgage Group, we access every available avenue to make sure that you know what your financing options are.
Simply put, there are 3 levels of financing; traditional lending which include the big Banks and monoline lenders that are only available to Mortgage Brokers, as well as private financing. Private financing, although usually a more expensive option, can facilitate all kinds of client scenarios. If circumstances cause you to fail to qualify for more traditional financing, then private lending is certainly something to look into. Because we all know that acquiring the funds to purchase a home now is a much better option than continuing to pay rent and pay down someone else’s mortgage.
Circumstances such as having credit issues from life experiences such as illness or divorce can cause huge heartache and despair when traditional lenders say no to financing or refinancing. Where private lenders can give the opportunity to keep their existing home or purchase a first home, such as someone who is new to Canada and cannot qualify for traditional lending because of lack of credit or even not being in the country long enough to be considered for “New to Canada” lender products.
The great thing about private terms is that they are shorter – typically one year – so, while the interest rate will be higher, you have the opportunity to establish the necessary credit over that year so that you can become eligible for traditional financing.
In private financing, you can expect to pay higher interest rates. As well, there will be added fees such as Lender fees, Broker fees, and administrative costs such as lawyer fees and title fees. Also, there likely will be appraisal costs as the private lender will want to see what kind of property is being funded. This is because the lender sees someone who does not qualify for traditional lending as someone who creates a higher risk in lending. But take heart, there are many clients around the country that take advantage of the opportunity of improving their financial situation through private lending. Remember, it is only a tool or a means to an end. The goal is to use private lending to improve your situation enough that you become eligible for traditional lending.
In private financing, the private lender will want to make sure that the property you are purchasing has good resale value. This is a very important aspect of using private lenders. As mentioned before, an appraisal is usually always a part of the application because the private lender wants to make sure that the property is marketable in case of foreclosure.
In private financing, the private lender will usually ask for at least 25% down. But there are also private lenders that will consider a smaller down payment. Remember, a smaller down payment usually means a higher interest rate.
At GLM Mortgage Group we have the relationship with private lenders to be able to negotiate the best possible terms available for the clients that we work with. We are experienced with working with private lenders and will leave no stone unturned so that you have every opportunity to finance the property that you need. Fill out our online application at www.glmmortgage.com and find out what your financing options are.
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