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Private Mortgages Info
Banks are known to be quite stringent when it comes to providing loans to clients. In most cases, when you have a bad credit record, you may not even get any kind of loan from the bank. The good news is that you can always go with a mortgage broker in Ottawa. We can offer you options regardless of your credit history or current financial situation and help you get Private Mortgages in Ottawa.
Ottawa’s Source for Private Mortgages Lenders – Just a Call Away
Legislation governing mortgages has made it increasingly difficult for Canadians to borrow money from institutional lenders. At Certified Brokers Ottawa we believe that you should not have to give up your dream of owning a home because you have an imperfect credit score. We have built up a vast portfolio of private mortgage lenders. Ottawa properties secure these loans.
Private mortgage lender Ottawa specialises in assisting people who for any number of reasons are finding it difficult to secure loans from Institutional Lenders.
A private mortgage will give you an opportunity to improve your credit score, increase your home equity or satisfy income requirements so that you can borrow from a regular mortgage provider at the end of the term.
Your Property Secures Your Private Mortgage
Ottawa private mortgage lenders are less interested in your income or your credit score than they are in the value of the property that you wish to purchase. This is because the property is used to secure the loan. In the event that you fail to make repayments, they will have the right to foreclose on the property. The proceeds from the sale are then used to cover the debt.
Private Mortgages Explained
Private mortgages are short-term loans. They usually run for terms of between six months and three years. The borrower is expected to repay only the interest during the term of the loan. When you apply for a private mortgage you must have an exit strategy, as the objective is to use the term of the loan to find alternative financing to repay the capital.
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Private Mortgage Lenders – Ottawa Loan Providers
People typically use private mortgage lenders when
- They want to purchase a property that the bank will not finance
- They have a problem with the credit score or have previously declared themselves bankrupt
- They want a second mortgage
- They cannot prove their income
- They need a quick loan for a short period of time to purchase property for investment
The Second Mortgage
One of the most popular forms of private funding is a second private mortgage. Ottawa residents often use this funding to top up the mortgage received from a conventional bank. If, for example, the bank has approved a mortgage on a loan to value ratio of 75%. The borrower may be unable to make a 25% down payment. He might then approach a private mortgage lender for a second mortgage to cover the difference between the first mortgage and the down payment that he can afford to pay.
Second mortgages are also frequently used to consolidate more expensive unsecured debt, or for home improvements.
You should consult a mortgage broker if you are looking for a private mortgage lender. Ottawa Mortgage brokers have dozens of private mortgage providers on their books. They will help to match you with the private lender that best suits your circumstances.
The Best Interest Rates from Private Mortgage Lenders Ottawa
To get the best interest rates from a private mortgage provider, you’ll need the following
- A low loan to value ratio – this means that there is less risk in the loan
- High credit score
- Sufficient income to make repayments
Private lenders Ottawa will approve mortgages that banks will not whether this is due to a low credit score or income problems. However, as the risk rises so will the interest rates.
Before you apply for a private mortgage in Ottawa you should at least understand the basics of a mortgage. A mortgage is a loan that is used for real estate purchases. The following information will help you with private mortgages.
Private Mortgage Lenders
If your access to credit is rather restricted, then a private mortgage lender maybe a better option for you. They are considered as “angel investors.” These may be wealthy individuals who also provide capital for business start-ups.
So, what do they look for?
A lot of lenders will be interested in knowing your credit score. It is an indicator of how responsible you are as a person when it comes to meeting your required payments. A lot of private mortgage lenders may be more lenient in this department compared to banks but they would still love to see what your current credit score is.
Lenders would look to see who is giving you credit now, if you have any debt that is currently in collections, if you have any defaulted accounts, and who has extended you some form of credit in the past.
What your current net worth will help assure lenders as to your ability to pay any loans provided to you. This applies to all lenders.
Lenders will be interested in finding out your sources of income.
Lenders will be very interested in what you currently owe to other financial institutions. They will also be interested in what you own.
Note that the larger the down payment you make, the larger will be size of the mortgage you will be able to make. Note also that the size of your monthly payments will also affect the total size of interest you will have to pay.
A conventional mortgage in Canada will require you to make a down payment that totals to 20% of the total amount of the loan. By doing so you will also reduce cost since you will not be required to purchase any mortgage insurance.
Zero Down Mortgage
Mortgages with zero down payments require the mortgager to have very high credit scores. The minimum down payment in the country is actually 5%. You reduce that to 0% via cash back from the lender.
High Ratio Mortgage
If you can’t pay a 20% down payment, don’t worry. You can still apply for mortgage. However, do take note that you will be required to purchase a default insurance or what is called a CMHC insurance. This time of mortgage tends to be more expensive due to the cost of the insurance that you will have to pay.