An alternative source of financing is a Private Mortgage. This is when your loan is not funded by a traditional bank or lender and is funded by a private lender instead. This option is usually exercised when the borrower is declined by a bank or lending institution. Private mortgages are short-term, interest-only loans, ranging in length from 1 to 3 years. Interest-only loans do not require homeowners to pay the mortgage principal down, and instead, only require interest payments each month. Private Mortgages tend to have higher interest rates compared to conventional loans due to the amount of risk taken on by the lender.

 

WHEN WOULD I NEED A PRIVATE MORTGAGE?

A Private Mortgage would be a good fit for your application when; 

• You need the funds as soon as possible

• You only need funds for a short period

• You have poor, bad credit, or no credit

• You have little to no income

• the bank declines your application

 

Due to strict guidelines set out by traditional banks and lending institutions, it is possible that some borrowers who are completely capable of qualifying for a mortgage and still get declined. Instead, private lenders take into account a property’s overall value and marketability as opposed to simply the borrower’s credit history.

 

HOW DO I QUALIFY FOR A PRIVATE MORTGAGE?

In order to qualify for a Private Mortgage, you need to meet the chosen lender's guidelines and provide them with certain information. Lenders analyze the borrower’s requested mortgage based on several factors such as;

 

• Downpayment (Loan-to-value)

• Property Value or Purchase Price

• Type of Property & Zoning

• Income (Only some lenders require this)
  
  
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