Private real estate lenders fill a void created by the major banks that will not provide loans to people who have a poor credit rating, are self employed or are on a pension. Private real estate lenders can provide loans for second and third mortgages or even home renovation loans when a bank will not. Private real estate lenders are a viable alternative to traditional banks. They have flexible criteria that can fit many different situations.
Second and third mortgages in most cases exceed the 85% loan to value ratio and even more importantly they are not first in terms of payment priority. This factor becomes very important if the property is put up for “power of sale” or “foreclosure”. The first mortgage holder may incur fees which can greatly reduce the remaining equity. This can reduce the chance of repayment for the second and third mortgage holders.
Private real estate lenders can provide loans for first, second and even third mortgages. Most Canadians will need a mortgage or to refinance a mortgage at some point in their life. Private real estate lenders can be very competitive on interest rates and any fees associate with a mortgage and a mortgage broker can quickly give you an idea of what the present rates are. First mortgages will usually have the lowest interest rate. Second mortgages will usually have a higher interest rate than first mortgages due to the higher level of risk on the mortgage. To determine what type of mortgage best fits your needs we recommend that you consult with a mortgage broker.
Many banks will reject you loan application if you have a poor or bad credit rating. This is true even if you have a good job and lots of equity in your home. Banks want to give loans to people who can prove that they will pay back the loan on time. Private real estate lenders are much more flexible in their lending criteria. They understand that there can be many reasons for a poor credit rating. The amount of equity in your home and your ability to make the monthly payments is much more important than a poor credit rating to a private lender.
Many people are not aware of their credit rating until they are turned down for a loan. Private lenders for real estate look at your credit rating as one component of your entire financial picture. Many private lenders for real estate consider the loan to value ratio to be the most important factor in determine whether you qualify for a mortgage. If you would like to know your credit rating you can go to the Equifax website. They will provide a free copy of your personal credit report. Take a look at your report to see if there are any errors. Confirm that it has been properly updated, if there are any errors inform Equifax right away.
Private lenders for real estate like to inspect the properties that they are providing mortgages for. They also like to talk to the property owners so that they can develop a personal relationship with the borrower. To ensure that your property gets the highest market value you should take a critical look at your property to determine how you can improve is appearance. Some suggestions are to thoroughly clean the inside and outside of the house. Painting can greatly improve the inside appearance and this is a relatively cheap job to do. Remember private lenders for real estate are people and will base part of their lending decision on their first impression of your home.
Trying to find the mortgage needed for your mortgage can be a very stressful experience, without knowing exactly how private real estate lenders operate a borrower will have little chance of getting funding. When you call our mortgage team we can tell you within minutes if your loan will be approved and when you can get the money from a private lender.