Is your bank taking its time because you are self-employed, do not have business income statements, perhaps have poor credit or just need a short-term loan? Look no more, we are lenders. Call us to find out about our in-house private mortgages for both residential and commercial properties.
Ultimately, a private mortgage doesn’t have the same restrictions as a traditional mortgage from a bank. With this in mind, it often offers more freedom and flexibility depending on whether the finances are coming from an individual or perhaps a business. Despite these differences, there is one key premise that makes the deal worthwhile; it must have a ‘win-win’ element for all parties. On one side, you have a borrower who is getting the money to buy a house or whatever it might be used for. On the other hand, you have an individual or business taking a risk with their money. As long as there is a return in place for them, it becomes worthwhile and the risk remains low for both.
Before we head into some precautions for private lending, we should first assess why this is necessary in the first place. The mortgage industry has been set up so that private lending can be avoided and everyone has a chance to borrow money from a conventional bank. Well, there are a couple of examples where private mortgages may be necessary as you will see below.
Help Friends / Family
This works both ways and the obvious ‘help’ comes from the lender who is choosing to provide their own money for their friend or family member. However, the borrower is also helping the lender and this comes back to the ‘win-win’ situation we discussed a little earlier. How? Rather than paying expensive interest to the banks, the interest will now be paid to someone you know. With this, you know that the money is doing good on both sides which is great news.
Aside from this, it could be the rules put in place by traditional lenders that mean private mortgages are the only option left. During the application process, there is a significant amount of paperwork and a substantial amount of information that needs to be provided before traditional lenders will consider you for a mortgage. If you are young, self-employed, do not have updated business income statements or have a low credit score it can be difficult to get the right paperwork in place. When this happens, the only options available to give up, or choose a private lender who can get your deal done fast.
Make the Agreement Official
Once this agreement is in place, it keeps everyone happy and it ensures that everyone knows the rules in place when it comes to repayments, interest rates, and more.
Interest rates have to be agreed upon along with applicable penalties for breaking the mortgage and any renewal terms. Keep in mind you have to make sure you set aside funds for covering closing costs: legal fees, unpaid taxes and any other disbursements.
Before the agreement is confirmed, there should be a discussion as to what happens in various circumstances. For example, what happens when a payment is missed? Can the loan be restructured in any way? If necessary, this is the best time to contact your legal counsel because they will assess your agreement and give you tips on how to improve it or make changes. If the attorney gives your contract the go-ahead, you can be fairly confident that the agreement is good to go.
What is a private mortgage?
Essentially, this type of mortgage is one that is provided by another person or even a business rather than the traditional route of choosing a bank. At times, it might be the only option left after getting rejected from a bank already. However, some people prefer this over borrowing from a finance provider.
- We Don’t Need Your Credit Score or Income Statements
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- No Penalties to Pay Off Your Mortgage Early
- Interest Only Payments
- We Finance Residential Construction
- Commercial Deals Are Welcome
Begin BuildingYour Personal Equity!
Investing in a mortgage for the first time is the best way to begin to build your own personal equity. Benson specializes in residential private mortgages in Ontario. If you’re ready to buy property and you’ve had a hard time getting approval from the banks, talk to us! We have a wide variety of financing options available and are happy to sit down with you, assess your financial situation and offer you a variety of customized solutions to choose from. Our simple and straightforward process makes it easy for you to finance your new home. Just tell us which property you’re interested in and we’ll help secure your mortgage.
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Frequently asked questions that can help you start your mortgage journey with us.
Contact Benson Mortgages specialist.
We offer a broad range of services to cater to different financial needs. Our services include residential mortgages for those looking to buy a home, refinancing for those who want to take advantage of better interest rates or terms, and transfers & HELOC for homeowners who want to leverage their home equity. We also provide private mortgages, 1st, 2nd & 3rd mortgages, reverse mortgages for seniors, commercial financing for businesses, and construction & land financing for developers.
A residential mortgage is a financial product that allows individuals to purchase residential property. The property is used as collateral for the loan, which is repaid over a specified period up to 40 years or interest only. The borrower makes regular payments to the lender, including the principal amount and interest.
A fixed-rate mortgage has an interest rate that remains the same throughout the loan term, providing stability and predictability for your payments. On the other hand, a variable-rate mortgage has an interest rate that can change over time based on market conditions. This means your payments could increase or decrease. The choice between the two depends on your financial situation, risk tolerance, and market expectations. There is also a variable rate mortgage with a fixed payment.
Refinancing a mortgage involves replacing your current mortgage with a new one, often with different terms or a lower interest rate. Refinance can be a good idea if you can secure a lower interest rate, and want to change the term length of your mortgage. You might need to access equity in your home in order to pay out debt, buy investment property or any other investments, pay for your kids' school or to renovate your home.
Secured Line of Credit is a type of loan that lets you borrow against the equity in your home. It works much like a credit line, where you have a credit limit and can borrow as much or as little as you need up to that limit. You only pay interest on the amount you borrow. It can be used for various purposes, such as home improvements, debt consolidation, or even to fund a business venture.
A private mortgage is a loan provided by a private entity or other financial institution, such as an individual or a business, rather than a traditional bank. People often choose private mortgages when they have unique financial circumstances that make it difficult to qualify for a traditional mortgage, such as being self-employed or having a less-than-perfect credit history. Private mortgages offer flexibility and can be customized to meet the borrower's needs. Private mortgages are used for the properties that do not meet banks criteria: land, properties under construction, agricultural properties, sub-divisions, etc
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