Private Mortgage for Residential Properties

Private lenders are a great option for buying one or multiple residential properties because they are not attached to the conventional lending guidelines, which are typically limited to four doors if borrowing from traditional mortgage lenders. Private lenders evaluate each mortgage application according to their internal reasonability guidelines. This typically means private lenders are able to surpass the loan limits that a bank would normally impose.

Private lenders are known to be more flexible than traditional lenders. So if you are not able to qualify for a mortgage loan from the traditional lenders, a private mortgage lender may be a reasonable option for you. In some cases, clients are able to save themselves from losing their house while they recover from recent financial troubles.

The process of refinancing residential properties with a private mortgage is much simpler than the process for traditional lenders. Although private lenders will still ask to verify some information to satisfy their internal lending guidelines, in general, it may actually be faster and easier.

Private lenders assess a mortgage loan application based on the property value and its location in the neighbourhood. A property appraisal is certainly a requirement that borrowers will need to satisfy as part of the refinancing process.

A private mortgage is more flexible than a traditional mortgage. Most private lenders allow the term to become Open after a few months, allowing borrowers to fully pay off the outstanding balance without incurring a prepayment penalty.

Remember that the more you can pay off your loan, the sooner you’ll be debt-free, and you’ll have more money to invest elsewhere.

The qualification process for a private mortgage is much faster than the one for a traditional lender. Because private lenders are more likely to view a mortgage as an investment, they focus more on the appraisal of the property to determine if the application will satisfy their lending guidelines or not.

That means personal financial troubles affecting the borrowers are less likely to cause an instant decline, which typically occurs if the application is to be evaluated according to traditional lenders’ lending guidelines.

Origination fee can also be referred to as “commitment fee”, or any other name. It usually refers to the underwriting or processing fee. This fee can cover a variety of expenses, from processing the loan to underwriting the loan. The amount of this fee depends on the lender and the type of mortgage loan. It is always stipulated in writing so there is no bad surprise to the borrowers on the closing day. If you are not sure how much you are paying for your origination fee, it is a sign that you are not working with an ethical private lender. Be aware and find other private lenders who are transparent with their origination fees.

At Canadian Private Mortgage, we disclose our commitment fee clearly in writing from the beginning of the process.