Mortgage Blog
Everything about Private Lender
October 10, 2024 | Posted by: Sarabjit Dhuna
Since September 2022, Share of the Private mortgage surge around 30% to 40%. More Homeowner are considering to get private mortgage for their flexible rules and regulation. However, private mortgage cost you more than traditional bank and B lender.
So, what is private Lender? Let's dive into
Private lender uses their own funds and capital rather than Public depositors like banks to lend you money for the mortgage.
These private lenders are varied from reputable company or single individual.
These private mortgages are not strict compared to traditional bank and B lenders. Private Mortgage Lenders create their own rules and regulation so it's better to review terms by your own lawyer to see any fine prints.
Factors to be considered for mortgage approval in Private Mortgage
LTV (Loan to value)
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Valuation, location and condition of the location
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Lender may check your credit score or income source
Why homeowner prefer private Mortgage
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People who are new to Canada and they don't have credit history
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People who have bad credit score
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People who do not have steady income source like small business owners.
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Consolidate high interest debts to one single debt and pay low interest rate (HELOC).
Disadvantage of Private Lender:
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You have to Pay higher interest rate compared to traditional and non-traditional banks.
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You also have to pay high lending fees which is depends on lender typically between 2% to 5%
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There will be fine print which you have to read carefully if you miss monthly payment and not renew with them.
