A majority of the mortgages in Canada are held either by the 4 major banks i.e. Royal Bank of Canada (RBC), Scotia Bank, Toronto Dominion (TD) or Canadian Imperial Bank of Commerce (CIBC) or one of the leading financial institutions
Most Canadians have heard of private mortgages but have little knowledge or concept of what they are or how they work. Private mortgages can be an alternative source of financing for borrowers and are usually a high return investment opportunity for investors. Most banks and institutional lenders typically need to satisfy strict lending criteria and are not willing to budge too far from the norm. As a result they will shy away from such transactions. Private lenders on the other hand are willing to fund such transactions based on the equity and location of the home. Effectively they come in where the major banks or institutional lenders are not willing to go.
The concept is simple — If time is not on your side and you cannot wait for a long approval process or you cannot qualify for a regular mortgage form a bank or institutional lender, then a private lender may be the answer to your situation.
Private Mortgages as a Refinancing Alternative
Private Mortgages can potentially become a great solution for homeowners who are looking for alternative financing options. Nowadays most home mortgages are under a few major banks in the country and most of them have a strict and long approval process. If you are a homeowner and are in need of funds for renovating your house or for personal expenses and are unable to get a mortgage from the banks then you can borrow the amount of money through a private mortgages.
So How Does A Private Mortgage Work?
Whether you are a homeowner looking for a second mortgage or someone interested in buying a home but are unable to get a home loan from a bank then you can look into getting a private mortgage. A private mortgage is simply a mortgage which is given through investors other than banks. These investors or private lending bodies have more flexible lending processes which are not as stringent and long drown out as conventional banks. In most cases you will be able to get a private mortgage as long as you are a home owner and there is equity in your home. The amount of loan amount you can get for a private mortgage will be based on the equity of your home.
Do You Really Need A Private Mortgage?
When you are looking for financing options it is very important to take an informed decision about the right kind of loan which would be suitable for you. In order to decide whether or not you really need a private mortgage here are a two important questions that you should ask yourself:
Do I Have Home Equity?
While this might seem a very obvious question, it is worth considering anyways. All homeowners who have a loan that is less than their home is worth, have a home equity. The equity is basically the value of the house after the loan amount is deducted from it. So if you are thinking of taking a second mortgage, an equity line of credit or a private mortgage, you need to be aware of the value of your home. Your home equity is therefore very important as this will be the one of the deciding factors of the mortgage amount that you can borrow.
Am I Really in Need Of Funds?
While home loans have been designed to ease your financial situation it is always crucial to understand the urgency of your financial needs. Remember that while the loan amount will need to be repaid by you in smaller sums of money, this will still affect your monthly budget. Therefore ensure that your financial needs are really important before you start deciding upon the kind of loan you that might be best suitable for you. On the other hand if you require money urgently and are unable to get a bank loan due to the time factor or a bad credit score then turning to a private loan could be the best option for you.
At Canadalend.com we network with a large number of private investors and lenders who have helped our clients with private mortgages. So ease your financial stress by getting in touch with us right away and we will be more than glad to professionally help you choose the best refinancing option available in the market!