A borrower may not always qualify for a traditional mortgage for a variety of circumstances, which we will discuss in this article. Not being approved for a traditional mortgage doesn’t necessarily mean you can't qualify for a mortgage. To qualify for a private mortgage to help you reach your home ownership goals, contact Familylending.ca to find out how we can help.
A private mortgage is a mortgage offered by a private lending company to those who do not qualify for a conventional mortgage. Essentially, private mortgages are not much different from conventional mortgages other than that the money for the mortgage is coming from a private source. Private mortgage companies have a higher risk tolerance for their borrowers and therefore can lend to people in situations that traditional mortgagers would not:
- Self-employed: Conventional lenders require proof of steady employment and income. Often persons who are self-employed earn enough annually to finance a home but are lacking the consistent income that traditional lenders are looking for. Private mortgage lenders have the flexibility to lend to the self-employed that show an ability to repay the mortgage.
- Persons with poor credit: Private mortgagers tend to be more flexible in their risk tolerance when it comes to credit history.
- Properties considered high-risk: Buying a home in an upcoming neighborhood or an area that may not show a high value increase potential can be difficult through conventional mortgages. Private mortgagers may see this as an investment opportunity and provide you with a mortgage.
- Using home equity for debt consolidation: Private mortgagers may be more likely than traditional mortgagers to help you use your home equity to consolidate debts through a second mortgage.
- Those who require bridge financing: Bridge financing is a method of financing that allows you to free up the cash in your home’s equity to purchase another property while you’re waiting for your current property to sell. Usually, private lenders are more likely to be able to help you with bridge financing than traditional lenders.
We're here to help get you up to speed on the ins-and-outs of private mortgages. Visit the following sections to find out if private mortgages are right for you and how to find the right lender: