A Private Mortgage is typically a short-term loan, usually ranging between one to three years, that is securitized by a Residential or Commercial property (or sometimes even blanketed across more than one property).
Private lenders are often able to provide alternative solutions to traditional Bank or Monoline lenders, who can sometimes be more restrictive or conservative in their lending guidelines.
The overall marketability and value of a home, which will securitize the loan for the Lender, is key on a Private Mortgage application, as opposed to a client’s credit history. At Magnum Mortgage Corp, we want to provide a lending solution to homeowners where a Traditional Bank or Monoline lender cannot help with a solution (on bank declines or bank turndowns).
Private Mortgages can provide a solution for clients in a number of different challenging situations.
Here are a few instances where a Private Mortgage may be an option for you to consider!
– Clients who require a refinance for quick access to their home equity, where a traditional lender may not be able to accommodate the timeline;
– Clients facing CRA garnishment (from tax arrears), or owe money to the CRA that need to be paid by with Equity in their home;
– Clients requiring consumer proposal payouts;
– Clients who need debt consolidation or home renovations (for home flips);
– Clients who require quick bridge financing or interim financing because their current Lender does not offer Bridge Financing or Interim Financing;
– When completing Estate buyouts to payout other parties, or to access equity to settle the Estate Expenses;
– Clients requiring top-ups on their CHIP Reverse Mortgages
Benefits of a Private Mortgage
1) Great for clients who have great credit, but down quite draw enough income from their businesses to qualify traditionally on a mortgage application with a traditional bank lender.
2) Clients who need access to quick financing (as traditional financing often takes a long processing time).
3) Can provide an option for clients who have bad credit and have been turned down by the Bank or a Mortgage Lender, but have ample equity in their home or ample savings that will be going towards their down payment on their home purchase.
4) Great for clients who would like to finance a mortgage under their Company name or Holding company name, instead of financing under their personal name.
5) Great for clients who would like to retain their great rate on their first mortgages, and are considering a private 2nd mortgage to draw out equity in their homes. Especially in a market, where rates are steadily increasing, often the blended rate between a Prime First Mortgage, & a Private Second Mortgage works out to be a more cost effective option to explore for the homeowner.
Common problems you might face
Sometimes clients exploring Private Mortgages may not have thought of an exit strategy upfront. As Private Mortgages can be quite costly, it’s great to think of this product as a short-term solution. If you align yourself with a knowledgeable Mortgage Broker or Mortgage Professional upfront (i.e., us!), we can help you discuss your strategy!
Questions to ask your mortgage professional
- What does the application process look like?
- What are the rates and fees I should expect on a private loan?
- Are there any documents that I should prepare or collect?
- What does it look like after my Private Mortgage funds? Who do I contact if I have questions after?
- What does my exit look like? Where do we go after the 1 – 3 year term comes up for renewal with my Private Mortgage?
Interest rates can range anywhere from 7.95% – 16% and Lender fees generally range between 1.5 – 6% depending on whether a borrower requires a first mortgage, a second mortgage, or interim financing/bridge financing. There are usually legal fees and appraisal costs involved as well.
First determine if you have enough equity in your home to consider a Private Mortgage option – don’t know how? Click here
If you have more than 20% equity in your home, a Private Mortgage may be an option for you!
Your next step would be to fill out an application by clicking here and submit your documents to get started. Our knowledgeable Mortgage Professionals / Mortgage Brokers at Magnum Mortgage Corp. can also find an alternative product / service if there’s a better fit.
If you are looking for mortgage lenders in Sherwood Park, Alberta, reach out to us at Magnum Mortgage Corp. We have been lending to great Alberta borrowers for eighteen years and are fully committed to supporting Albertans through all the ups and downs of their financing needs. Whether you are looking to purchase a lake lot to build your dream cabin or your financing situation just doesn’t fit the exact mold the bank needs you to fit into, we can help.
We offer services like new purchase mortgage, equity take out mortgage, mortgage foreclosure, debt consolidation mortgage, renovation mortgage, construction mortgage, interim financing, new to Canada mortgage, revenue property mortgage, private mortgage, bad credit loans, CRA garnishment, alternate mortgage financing, non-traditional lending, and home equity loans.
We serve clients across Sherwood Park, Strathcona County, Sturgeon County, Parkland County, Leduc County, Edmonton, St. Albert, Spruce Grove, Fort Saskatchewan, Red Deer, Beaumont, Camrose, and the surrounding areas.
Get in touch with us today!
To learn more about the services we offer, please click here. If you have a unique scenario that you’d like to run by us, please contact us by clicking here or calling us at (780) 467-6393.