Mortgage Blog
Private Mortgage vs Bank Mortgage
March 7, 2024 | Posted by: Sarabjit Dhuna
Both Private mortgages and bank mortgages have their pros and cons. It depends on needs and preference of individuals about which mortgages are better.
Let's first talk about Private mortgages and Bank mortgages
Private Mortgages: -
When Private entities or investment firm lends money directly to borrowers is called private mortgages. When borrowers have poor credit history or irregular income source, they opt for private Mortgages instead of bank or traditional mortgages.
Bank Mortgages: -
Borrowers prefer to get bank mortgages when they have good credit score, stable income source and Conventional property. Bank mortgages are loans that is provided by banks, Credit unions and mortgage companies.
Pros and cons of Private mortgages: -
Pros of Private mortgages: -
- Private mortgage lenders can offer more flexibility compared to bank mortgages regarding financial background like credit score and income source.
- Private mortgage lenders can approve mortgage application quickly as they have shorter approval processes compared to bank mortgages.
- Private mortgage lenders can be more open to negotiate for the interest rate, repayment schedule and collateral requirements as per individual.
Cons of Private Mortgage: -
- Private mortgages can usually come with higher interest rates compared to bank mortgages as there are risks that taken by lenders
- Borrowers may get less consumer protection compared to bank mortgages as it's less regulated than bank.
Why some Homebuyers prefer to opt for Private mortgages than Traditional bank mortgages: -
- Private mortgage lenders can give more options for borrowers who may not be eligible for criteria set by banks.
- It is easier to compare different lender rates and borrowers can negotiate interest rates.
Conclusion: -
The decision between Private mortgage and bank mortgage is your financial situation. If you want more flexibility and accessibility, then Private mortgage is right for you. While Bank mortgages can provide more regulated protection and less interest rate. Still undecided, you can contact me Sarabjit on my phone 647-282-4100.
