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How Private Mortgages Solved Unique Situations

How Private Mortgage Lenders Solved Unique Situations

Private mortgage lenders offer an excellent alternative for a specific group of borrowers. These alternative lenders provide a streamlined approval process faster than the more conventional options. Private lenders also cater to borrowers with less-than-perfect credit scores who are self-employed or have other unique incomes. 

People who take out private mortgages usually have some sort of urgent financial need. Homeowner issues can include everything from a foreclosure to an unexpectedly high bill for a home repair.  Remember, private mortgage lenders overlook high debt ratios to approve mortgages. 

Rescuing Borrowers from Foreclosure

Unfortunately, some people are looking for a private mortgage because they are on the verge of losing their homes through foreclosure or power of sale. A lender can sell the property through a power of sale. With a foreclosure, the lender also takes the title to the house.

Borrowers facing foreclosure can feel comfortable knowing the Ontario Mortgages Act governs mortgage transactions. Private mortgages can stop foreclosures and power of sale, so a homeowner isn’t evicted. When the existing mortgage lender pursuing eviction is paid off, they must stop all eviction proceedings.

Bridge Financing for Property Investors

Bridge financing occurs when someone buys a house without selling the one they own first. A private mortgage offers a good solution here. Private mortgages can be arranged quickly and carry more flexible terms than those offered by banks. Borrowers can arrange a mortgage that is designed to be used for a short time and include minimal termination fees. 

Debt Consolidation Success Stories

Applying for a consolidation loan can be done through a broker and private lender. These are excellent financial tools because they combine different loans and credit card accounts into one monthly payment.

In one example situation, a woman’s husband walks out on her, leaving her with a mortgage and a daughter. She lost 60% of her household income. Unfortunately, she found she was only making minimum payments and eventually started using her credit cards.

She started carrying $22,000 worth of debt. Fourteen months after applying for a debt consolidation she finds herself debt free. 

Reasons For Debt Consolidation Loans

Some people can face overwhelming debt from personal loans, credit cards, and other sources. Debt consolidation can help them devise a manageable plan to avoid bankruptcy and protect their credit scores while maintaining a decent standard of living.

Navigating a debt consolidation loan properly means looking for different ways to consolidate your debt. For example, a private lender will suggest starting with high-interest-rate loans like credit cards. 

Private mortgages used for consolidation loans come with fixed interest rates and detailed monthly payment plans. They can solve an overwhelming debt issue by giving you a secure sense of the monthly interest rate so you can make more than the minimum payment. 

Unique Property Financing Challenges

Private mortgages are also handy for solving unique property financing challenges like the following.:

An unexpected repair or renovation running over budget can be a financial problem. For example, a new asphalt shingle roof can cost an average of $8,200, according to HomeStars. Private mortgage lenders look at the equity you’ve built up to provide money for jobs like this.

Disasters aside, even a kitchen remodel can set you back as much as $40,000.Iit’s another scenario where getting the money from an alternative lender comes in handy 

A private mortgage lender also uses your LTV, the equity you’ve built. That is handy when homeowners need extra cash for unexpected medical expenses or mounting debts.

Why a Home Appraisal is Needed  

Private lenders are looking to approve property owners who have at least 25% of available equity. This makes a home appraisal vital. An appraiser looks at several different factors like the state of the property and the location to decide on the price.

It’s a good idea to include a property survey if you have one and any descriptions and receipts for home improvements you’ve made in the last 15 years. Adding in any old appraisals helps. 

Remember, there are a number of small businesses you can open up by using an alternative lender.

Entrepreneurial Ventures Supported by Private Mortgages

Private mortgages are an excellent way to start a business. Here are a few examples.

  • Real Estate Investors use private mortgages To purchase properties they can upgrade and renovate to resell for profit. 
  • Private mortgages are an excellent method to get startup financing.
  • Accountants, doctors, lawyers and other professionals use private mortgages to acquire more office space when they are expanding.
  • Entrepreneurs looking to buy businesses get the necessary funding through private mortgages.

Entrepreneurs looking to use private mortgages should understand these businesses and individuals are not connected to credit unions or banks. They want to invest their money and make a return, which means they charge higher interest rates to cover the risks.

Private mortgages usually last only one or two years, considerably less than traditional institutions. Entrepreneurs can wind up cycling through a series of private loans.

Private mortgages qualify the property first in many different situations. The applicant’s financial situation isn’t the first benchmark used. 

Looking to Solve a Unique Situation with A Private Mortgage? 

Mortgage Broker Store focuses on numerous mortgage-related products. Mortgages that don’t meet traditional lending institution requirements are one of our priorities. Our team includes private lenders, brokers, and licensed mortgage agents. Let us help you prepare for and get a private loan that meets your specific requirements. 

Email ron@mortgagebrokerstore.com or call 416-499-2122.

About Jonathan Alphonso

Mortgage Agent, Web Developer, and Real Estate Investor. Together with Ronald Alphonso I run MortgageBrokerStore.com. I write about a variety of topics on Canadian mortgages and real estate. Our particular specialty is dealing with Ontario power of sale and foreclosure situations.

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