When life hits a bump in the road and you find yourself riding on the shoulder of a financial crunch, it can feel overwhelming. We’ve all been there: family emergencies, work lay-offs, CRA repayments. You may find yourself asking, “How am I going to pay these bills?” The pressure to find quick solutions can be intense. Payday loans seem to be on every block, but are they really the answer to getting you out of a pickle?
NO! NO! NO!
There is another potential solution that traditional banks often don’t mention: a private mortgage. For residents of Guelph or anyone searching for alternative financing, a private mortgage in Guelph might offer a more sensible short-term strategy compared to payday loans. At Skip The Bank, we’re experts in all things private mortgages. Let’s dive into what private mortgages are and why they could be a better option for you.
What Is a Private Mortgage?
In Canada, private mortgages are loans offered by private investors or lenders instead of traditional banks or mortgage investment companies. These loans are particularly useful if you’re having difficulty securing financing from a bank due to:
- Non-traditional income sources
- Bruised credit history
- Unique property characteristics
- Homes under renovation
Private mortgages can also help you access equity in your home without breaking your existing mortgage term. This can be especially advantageous if you currently have a great low-interest rate and your mortgage maturity date is just a year or two away.
How Do Private Mortgages Work?
Private mortgages are typically easier to obtain because they involve fewer approval criteria. Since you’re dealing with private investors or small groups of investors, the process is often more flexible and quicker than traditional bank loans. By working with a private mortgage broker in Guelph, you can benefit from the following:
Equity-Based Lending
Private lenders focus on the equity in your home rather than your credit score or income.
Higher Interest Rates
While the interest rates are higher than those of traditional banks, they’re significantly lower than payday loans.
Flexible Terms
Terms and payment options are often negotiable, tailored to your needs, and structured for short-term solutions.
Quick Turnaround
These mortgages can be processed in as little as two to three weeks.
Private mortgages are usually registered as a second or even third position on your property. The ultimate goal is to consolidate the private mortgage into your first mortgage when it matures.
Benefits of Private Mortgages
1. Quick Approval and Shorter Processing Time
Private mortgages have less stringent approval criteria, so the process is much faster.
2. Preserve Your Existing Mortgage Rate
You don’t lose the favorable rate on your current mortgage by breaking your term.
3. Flexible for Those Who Don’t Qualify with Banks
If you’ve experienced job changes, missed payments, or high credit balances, refinancing with your existing lender might not be an option. A private mortgage broker in Guelph can provide a viable alternative.
4. Better than Payday Loans
Payday loans often come with sky-high interest rates and restrictive repayment terms. A private mortgage offers more reasonable rates and flexible options.
5. Debt Consolidation
Consolidating debt into a private mortgage can improve cash flow by lowering payments and simplifying your financial obligations.
6. Temporary Financial Relief
A private second mortgage can act as a bridge to get you through financial challenges.
Things to Keep in Mind About Private Mortgages
Higher Interest Rates: Private mortgages come with higher rates to account for the increased risk taken by the lender.
Short-Term Solution: These loans are designed for the short term, often with terms lasting one to three years.
Additional Fees: Legal fees, broker fees, and lender fees can add to the cost of a private mortgage.
Exit Strategy: It’s crucial to have a clear plan for repaying the private mortgage, whether through refinancing or selling the property when your first mortgage matures.
Is a Private Mortgage Right for You?
If you’ve been turned down by traditional lenders or need more flexible financing options, a private mortgage might be the solution you’re looking for. For those in Guelph seeking personalized mortgage solutions, private mortgages can be a lifeline. It’s not a long-term strategy, but it can help you navigate temporary financial challenges while protecting your home and financial future.
Book Your Free Consultation Today
At The Mortgage Centre, we’re here to help you explore your options. Contact us today to schedule a virtual consultation with a private mortgage broker in Guelph and discover how a private mortgage can work for you. Together, we can craft a solution to get you back on solid financial ground.