Private Mortgage

Reverse Mortgage

 Private Mortgage?

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Private loans are short-term, interest-only loans to purchase real estate and can be easier to qualify for because they are provided by independent individuals or organizations.
Private loans are offered by individuals or institutions to prospective homebuyers who can’t get a traditional loan from a financial institution like a bank, and these loans are similar to subprime mortgages.
Homebuyers may seek a private mortgage if they have a poor credit history and don’t qualify for a traditional loan under the rules of other mortgage lenders. Private lenders are likely to view the mortgage as an investment, so they are not as strict about credit history and background checks, but more recently, private loans are also rigorously evaluated by title insurance companies for credit history, mortgage use, and background checks.
A private mortgage may be right for you if you’re buying a unique type of home, don’t plan to own the property for a long time, or have a non-traditional source of income.
Private loans are often short-term, with typical repayment terms of six months to a year. After making on-time payments during this time, the borrower is thought to be in a better position to apply for a mortgage from a lender like a bank.
The interest rates offered by private mortgage lenders tend to be considerably higher than those offered by traditional lenders, but this is mainly because the payments on this type of loan are interest-only. With an interest-only mortgage, no principal payments are made at all, so the total amount owed does not decrease over time as it does with a conventional mortgage.
The process of getting a private mortgage is much faster and easier than qualifying for a conventional mortgage, but these benefits come with higher interest rates, fees, and potentially a lot of risk.

What is a Sub Prime Mortgage?

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A subprime mortgage is a financing option for homebuyers who don’t meet the typical mortgage approval requirements set by traditional banks and credit unions.
Many people think of subprime mortgages as taboo, especially after the subprime mortgage crisis in the U.S. However, like many financial products, subprime mortgages have their pros and cons.
Subprime mortgages are an option because a mortgage application can be denied if the borrower does not qualify for a mortgage loan from one of Canada’s chartered banks (called A lenders).