Self-employed individuals, persons who are new to Canada and other people with bad or bruised credit history may not be able to avail a traditional mortgage. It is better for them to go for a private mortgage. Even people who fit the criteria for a traditional mortgage opt for a private mortgage because they get better rates and are quicker with the processing. But what are private mortgages? Nothing but mortgages from private lenders. Here is a summarization of why considering a private mortgage is better than waiting till you are eligible for a traditional one;
- Less documents are required.
In many instances, self-employed individuals have been denied a traditional loan because they could not confirm their income on paper. Similarly, citizens who are new to Canada do not have a credit history and this makes them seem risky to lenders. But in such a mortgage, the need for less documents provides for a wider eligibility range for individuals.
- Flexible with credit history.
Most private lenders understand that you are looking towards them mainly because you have less credit history or a bad one. This means that they are way more flexible than the traditional lenders. If you have enough equity in your property or can make a significant down payment, then your credit history is of no consequence. This can really help self-employed people get the loan they want.
- The value of the property is considered not your finances.
Private lenders provide private mortgages based on the value of the property you are buying or taking the mortgage against. If the property has good equity, it seems like a lesser risk to lenders and hence they can offer good rates and make good deals.
- Fast financing.
One of the perks of getting a private mortgage is the speed. Since there is much less documentation involved and the rates are more favorable, the process moves along much faster. Mortgage brokers are able to find the best rates quickly and can help you customize the best rates and terms into your scheme.
- Private mortgage brokers can get better deals.
Since private lenders have higher risk tolerance than the banks, they are able to give you low rate deals and be flexible with the customization of the plan. This can make it more favorable for you as the private mortgage broker will be working according to your finances.