Private mortgages are becoming increasingly popular in Canada given the flexibility offered by private mortgage lenders, the shift toward freelance jobs and self-employment with irregular income, and interest in short-term loans among real estate investors who are flipping properties. Few Canadians, however, understand the difference between a private mortgage and traditional lending.

Those interested in sourcing the best mortgage could benefit from involving an experienced mortgage broker who possesses the knowledge and experience in working with multiple private lenders. Meanwhile, it is important to understand what a private mortgage is, when turning to private mortgage lenders is a better choice, and how you could qualify.

What is a Private Mortgage?

A private mortgage is a loan financed by a private lender. The main difference between a private mortgage and a traditional mortgage lies in whether the loan is provided by private lenders or by banks.

Still, the difference becomes even more pronounced when comparing the terms offered by private mortgage lenders with those from the banking industry. Private mortgage loans are often more flexible, are much easier to qualify and get approval for, and are a viable option for those with a low credit score. On the downside, a private mortgage typically comes with higher interest rates and is offered for shorter terms.

When to Consult Private Lenders

There are several situations when someone may opt to work with private mortgage lenders instead of going to a bank. Those with a lower credit score, young homebuyers without a strong credit history, and self-employed individuals with unverifiable or irregular income are generally non-eligible for bank mortgaging and don't have other alternatives except turning to private lenders.

In another scenario, private lenders can be the choice for those homebuyers who seek quick financing to buy a new home before the sale of their property. A private mortgage may also be sought by real estate investors who buy properties for renovation and flipping and seek second or third mortgages.

How to Qualify for a Private Mortgage

The process of qualifying for a private mortgage is one of its primary advantages. Getting approved for a private mortgage loan is much easier than with a bank and takes less time and documentation. The whole process is designed to streamline private mortgage financing as much as possible.

Meanwhile, those interested in getting a private mortgage should secure a larger down payment, as most private lenders ask for no less than 15-20%. They should also be aware that private mortgages are usually offered for the short term only, not exceeding 1-3 years, after which the borrowers will have to renew the mortgage or repay the balance.

Get Professional Mortgage Help

 If you are interested in exploring your options for a private mortgage, you will benefit from consulting a professional mortgage broker working with different lenders who can advise you on all available alternatives for obtaining financing in your particular case. Whether you have a lower credit score, don't have a verifiable or regular income, or are looking for a second or third mortgage, mortgage professionals from EasyMortgageLend.com will be happy to assist you.

 Call us today at 647-895-3921, send us an email or reach out by filling in the contact form on our website, and we will be happy to provide you with a free consultation on the best mortgage solutions available for you.