Even though mortgage rates are at historic lows, accessing traditional mortgage loans with banks remains difficult for many borrowers. People are therefore looking for new financing options in order to acquire one or more properties. Whether it is for the purchase of a primary residence or for a short- or medium-term investment, taking out a mortgage with a private lender is becoming an attractive option for many.
1. Who should use a private loan to acquire a property?
If you are in no rush and have a good job, good income, great credit and enough borrowing capacity, then a private mortgage is not for you. You should look at traditional banks for a lower cost loan.
However, there are dozens of situations where private mortgage financing for home ownership is a good option. Here are a few:
- you are self-employed but have been in business for less than two years;
- you have to conclude a real estate transaction on short notice and cannot wait weeks for an answer from the bank;
- you have recently immigrated to Canada and you have a 25% down payment but no credit history;
- you are self-employed but your declared income in the past 2 years is too low to qualify for bank financing.
2. Why choose a private loan to acquire a property?
Financing a property with a private mortgage should always be considered a temporary solution as you move towards refinancing with a traditional bank. The average loan term is 6 to 36 months.
People opt for this solution for the following reasons:
- It’s much faster than a conventional bank. It can take several days for a conventional mortgage loan application to be approved. With us you can make an application in less than five minutes using our secure online form and get a same-day response.
- The approval process is so simple. No more endless paperwork and having to meet certain debt ratio criteria to qualify. The approval of our private loans is based primarily on the net capital available on the property.
- You will have access to flexible payment terms. Your ability to repay is essential to us. So that is why we offer payment terms that allow you to lower your monthly payments or even prepay the full interest on the loan.
3. What does it take to qualify?
a. The down payment
In order to acquire a property with a private mortgage, you must first have a down payment of at least 25% of the purchase price. For example, if you are buying a property for $200,000, the down payment required is $50,000. If you do not have a down payment but instead have other real estate assets, we can look at the possibility of using the available equity in these other properties to replace or reduce the required down payment. Our mortgage calculator can help you determine the maximum amount available to finance on your property.
b. The location of the property
In order to obtain approval for private mortgage financing, the property you wish to acquire must be located in an urban area of more than 25,000 inhabitants. The regions we mainly serve are Greater Montreal, Quebec, Sherbrooke and Gatineau. If the property is not located in an urban area, we can still evaluate your application for financing, but with a lower loan-to-value ratio.
How can I apply for a mortgage loan?
Apply online via our website or call us at 1 (877) 220-7738, extension 1.