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Where to Go for A Mortgage If You’re Rejected by The Bank?

Where to Go for A Mortgage If You’re Rejected by The Bank?

posted in Mortgage News

It’s not always easy to qualify for a mortgage, and with government regulations increasingly targeting down payments, high ratio buyers and investment properties, more and more Canadians – including those who are self-employed, living in rural areas or have a poor credit history - are continuing to struggle to qualify for a home loan.

With this in mind, more mortgage hunting Canadians are now seeking help from private lenders, and while these are often thought of as being a last resort and not an option you would seek if given a choice, they can actually prove a fortuitous choice for many.

So, if you’ve been rejected by any (or all) of the major banks, head firstly to a mortgage broker, who will explore all of the options available to you, including seeking a loan from a private lender. Once they’ve assessed your specific circumstances and plans for the future, among other factors, they’ll go on to give you several recommendations that don’t always include the big banks.

How do private mortgage lenders operate and what are their benefits?

Simply put, a private mortgage is one that is offered by an individual or company, instead of banks and other, more traditional finance providers.

Private mortgage lenders operate differently to banks and traditional finance providers in a variety of ways, and have more freedom to set their own criteria for lending. In turn, their application process is more flexible, and they’re not required to deal with the strict guidelines put in place by the major institutions. For those Canadians with economic or personal circumstances that fall outside of the conventional guidelines, this could mean that a private mortgage lender is your best option.

Your mortgage broker will give you further advice and guidance about private lenders, and will inform you that such lenders typically lend taking location into consideration. Private mortgages are uninsured, so should a default occur, the lender will fall back on the property, making its location important when they’re determining whether you qualify for a private mortgage.

Who could benefit from a private mortgage?

If you fall into any of the below categories, then it might be worth talking to your mortgage broker about seeking a loan from a private lender. Having said that, the main advantage of working with a broker is that they automatically search a variety of lending options for you, and may recommend a private lender anyway:

  • Self employed
  • Wish to buy land or a unique style of property
  • Have a poor credit history
  • Want to invest in real estate
  • Need to access equity in your home, but without having to refinance your mortgage due to penalties
  • Wish to renovate an existing property
  • Need to consolidate a high interest rate debt
  • Are seeking a short-term loan

Growing in popularity, private mortgages are continuing to be a viable option for many Canadians seeking to buy a property, and with the help of a qualified and experienced mortgage broker, you should easily find an alternative lender to the major banks.

 

Mortgage News

28 dOct, 2020

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