Many people do not really understand what a private lender does or how they may be able to help in your particular situation. Private lenders for people with bad credit fill a void in equity lending created by financial institutions that are risk adverse. Private lenders for people with bad credit will consider making loans to people with a bad credit rating or that are self employed, explain your particular situation including why you have a bad credit score. Private lenders for people with bad credit invest their own funds and therefore set the criteria for each loan or mortgage and provide funds for second and third mortgages. The interest rate will be higher than a conventional mortgage but the higher interest rate is a reflection of the higher level of risk on these types of loans.
Self employed income raises a number of red flags with many Canadian lenders such as the major banks. The main reason is that self employed income can be overstated or understated; people can say that they made more or less money and pay taxes tax on the declared income. In most cases a traditional lender will want “notices of assessment” from Revenue Canada for the past three years to confirm your income. In contrast private lenders for people with bad credit view self employed income as one part of your overall financial situation. If there is equity in your property, private lender may be interested in providing you with the money required.
Most private lenders for people with bad credit consider the loan to value (LTV) ratio of your property to be the main factor in deciding to fund your loan. A loan to value ratio over 85% usually means that your chances of getting any money are low while a loan to value ratio below 75% means that your chances of getting money for your mortgage is very good. The difficult range for a loan to value ratio is between 75% and 85%. Private lenders for people with bad credit will consider each person’s situation to decide on whether they qualify for a mortgage. For people with a very high loan to value ratio, other factors mat also include, how long it takes to sell a house, or whether the private investor lives in the same geographic area. To determine the loan to value ratio of your home divide the present mortgage amount by the value of your home, for example a $200,000.00 first mortgage divided by the $400,000.00 value of the property, results in a loan to value ratio of 50%.
For most mortgage and loan transactions a private lender requires an appraisal of the house or property. Appraisers provide an independent estimate of the present value of a house or property. An appraiser will compare your house to three other similar houses that have sold in your local geographic area. Adjustments will be made for factors such as different square foot or the number of bedrooms and bathrooms in a house. The appraised value will be the amount that the mortgage or loan will be based upon, as the property owner you should make sure the house is clean and tidy before the appraisal is done so you can maximize the property value.
Our private lenders for people with bad credit and mortgage agents are here to help you get the funds required for your mortgage, I am a private lender. Our agents try to make the loan process as simple as possible. Our clients are informed of all the possible options before they choose the mortgage that is right for their situation. By simply calling one of our brokers you will receive a free consultation that can show you how a private lender can reduce your stress and financial problems, I am a private lender.