Private Mortgage Lenders Calgary
If you're looking for a mortgage in Calgary, you may have heard of private mortgage lenders. A private mortgage lender is an alternative lending option to traditional banks and credit unions.
There are pros and cons to any lender, but the biggest pro of private mortgage lenders is their approval rate. People with complicated finances, like those with low credit scores or those who are self-employed, are more likely to be approved for a mortgage by private lenders.
What Is a Private Mortgage Lender?
These lenders are not banks or credit unions and operate privately and independently. Because they are privately owned, private mortgage lenders can set their own eligibility criteria, making them a suitable option for people who can’t get a mortgage from other lenders.
Private mortgage lenders can offer a range of loan options, including short-term loans, long-term loans, and bridge loans. These loans can be used for a variety of purposes, including purchasing a property, refinancing an existing mortgage, or renovating a property.
Benefits of Private Mortgage Lenders
Flexibility
Private mortgage lenders are more flexible than traditional lenders. They can offer more flexible terms, such as interest-only payments, shorter terms, and higher loan-to-value ratios.
This can be especially helpful if you have unique circumstances or are having trouble getting approved by a traditional lender.
Speed
One of the benefits of working with private mortgage lenders is that they can often provide financing more quickly than traditional lenders.
Private mortgage lenders can often provide funding much faster than traditional lenders. This is because private mortgage lenders are not subject to the same regulations as banks and credit unions, which can slow down the loan process.
If you need a mortgage quickly, a private mortgage lender may be your best option.
Less Stringent Requirements
Private mortgage lenders are generally less strict when it comes to credit scores and income requirements. They are more interested in the value of the property and your ability to repay the loan.
This can make it easier for you to get approved, even if you have a low credit score or are self-employed.
Personalized Service
Private mortgage lenders are often more willing to work with you on a personal level. They can offer customized solutions to fit your unique needs and circumstances. This can make the mortgage process less stressful and more manageable.
Open Mortgage Rates
Although private mortgage lenders may charge higher interest rates than traditional lenders, these rates can come with superior flexibility to what you may find at the traditional banks and credit unions. These mortgages can be 3-6 month open mortgages which means that they can be paid out in full without payout penalties if you sell the property or are able to refinance the loan.
Drawbacks of Private Mortgage Lenders
Higher Interest Rates
Private mortgage lenders charge higher interest rates than traditional lenders. This is because they are taking on a higher risk by lending money to those who may have a poor credit history or inconsistent income.
Larger Down Payment
Private mortgage lenders may require a larger down payment than traditional lenders. This is to offset the risk they are taking on by lending money to those who may not be able to make their payments.
How to Choose a Private Mortgage Lender
Interest Rates and Fees
One of the most important factors to consider when evaluating private mortgage lenders is their interest rates and fees.
Private lenders typically charge higher interest rates than traditional lenders, but they may also charge additional fees such as origination fees, appraisal fees, and legal fees.
Loan Terms and Flexibility
Private mortgage lenders may offer more flexibility than traditional lenders when it comes to loan terms. For example, they may be willing to work with borrowers who have poor credit or who are self-employed.
However, this flexibility may come at a cost, such as higher interest rates or stricter repayment terms. Make sure you understand the terms of the loan and that they are a good fit for your financial situation.
Customer Service and Communication
It's important to consider the customer service and communication of the private mortgage lender. Look for lenders who are responsive to your questions and concerns and who are transparent about the loan process. Good communication is key to ensuring a smooth and stress-free borrowing experience.
Leaning on your Mortgage Broker
If your file requires a private mortgage is it important to work with a Mortgage Broker that has experience in the private lending space. Lean on your broker’s experience when you’re choosing your mortgage and ask lots of questions. Here are a list of questions you should ask before engaging in a private mortgage loan:
What is my private lending rate?
What is the term (length) of my private mortgage?
What is the lender fee being charged by the private lender?
What are the legal fees being charged by the private lender?
What is my exit strategy on the private loan?
If we can’t exit the loan at the end of the term, what are the renewal fees?
Google Reviews
Checking Google reviews for both your mortgage broker and your private mortgage lenders is essential for making an informed decision and ensuring a positive experience. Google reviews provide valuable insights into the reputation, reliability, and customer service of lenders.
Get in Touch with a Mortgage Broker
Working with a mortgage broker is one of the easiest ways to get a mortgage through a private lender.
A mortgage broker can get you access to a wide array of private mortgage lenders. Instead of you having to compare rates from lender to lender, a mortgage broker can compare rates for you and present you with the best option.
Apply now and the mortgage brokers at Spire Mortgage will connect you with the best private mortgage lender for your unique situation.
