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What is a Private Mortgage?

January 3rd, 2011 No comments

A private mortgage is a mortgage that is given by a private person as opposed to a bank, mortgage company or trust company providing you with the funds.  As a mortgage broker I bring clients and lenders together.  Ideally my first choice is to but a client with a mortgage company or bank; where I ensure they receive the best possible rate.  The banks and mortgage companies can provide the best rates as they are risk adverse when they grant mortgages.  They want clients with good credit, verifiable income and they want the property to be in a good marketable area.  Ideally they want the mortgage to be insured against default with one of the mortgage insurers (CMHC – Canada Mortgage and Housing Corporation, Genworth or Canada Guaranty).  If the client does not qualify for mortgage default insurance due to bad credit, provable income or the property does not meet the insurers’ guidelines.  Sometime the only way a client is going to get financing is to go to alternative sources for funding.  A private lender will take more risks than a financial institution however, then you are looking at higher rate of interest plus fees.  For a first mortgage you can look at an interest rate between 8 and 10 per cent and for a second mortgage you could be looking at paying between 12 and 15 per cent plus lender and broker fees.

This is very expensive financing and should only be sort as a last resort.  As a mortgage brokerage we do have access to private funds so if you are looking for a private mortgage please contact us for a free confidential consultation.    Tel: 1.866.824.8057 or  www.designermortgages.ca for contact information.

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