Private Mortgage Solution for Borrowers with Accounts in Collection

What You Need To Know

Collection accounts are loan accounts that are owed by customers and have been sold by the creditor to a collection agency. The creditor has sold the loan account because they felt that they will not collect the debt themselves. Collection accounts are also referred to as charged-off accounts.

Any borrowers who have an outstanding debt that is sent to a collection agency will see this record appearing on their credit bureau report. This record affects the creditworthiness of the borrowers for future loan and mortgage applications.

Alternatively, borrowers can consider a mortgage solution from private lenders who have more flexible lending guidelines focusing on the value of the property and less on the creditworthiness of the borrower.

At Canadian Private Mortgage, our clients know that we won’t steer them into any products or financial terms that don’t fit their personal goals.

Our private mortgage solution for borrowers with a history of accounts sent to a collection is ideal for those who are willing to improve their borrowing habits and return their financial situation back to normal.

Any proposed lending solutions will include an exit strategy that enables clients to get back to normal as soon as possible, such as paying off the outstanding loan amount to remove them from the collection and create an affordable payment plan.

Lending Solution For Borrowers with Bankruptcy

Improve Creditworthiness After Collection

Accounts in the collection are near to bankruptcy, which is also considered to be a negative record on a borrower’s credit report and would affect the personal credit score for years.

One of the best ways to improve the credit score after paying off the accounts that were sent to collection is to get a secured credit card with a small credit limit and make sure to pay off the balance in full by the due date. Over time, this responsible habit of borrowing and paying in full will improve the borrower’s credit score.

Financing Options for Borrowers with History of Accounts in Collection

The process of obtaining financing for borrowers with a history of accounts sent to a collection is much simpler done with a private lender than the process imposed by 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.

Also, generally speaking, private lenders will allow higher loan-to-value (LTV) than traditional banks and lenders.

Quicker Funding

Private lenders are an ideal option since they are not tied to the same lending guidelines as traditional lenders which is limiting. Unlike bank loans, private lenders focus more on the value of the property and the borrower’s exit strategy to determine the terms of the loan. This means that they will not make any preconditions on the borrower’s credit score or debt to income ratio.

A big advantage of hard money lending is that you can beat traditional lenders’ interest rates and timeframes. While traditional banks are known for their long loan terms, hard money loans can close in just days or weeks. This is important in time-sensitive situations, such as paying off accounts in a collection to be free and clear. Getting a mortgage loan approved faster helps you resolve your personal situation faster and avoid delays.

Origination Fee

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.

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What Our Clients Say

Andrea Chase - Hamilton, ON

Andrea Chase, Hamilton, ON

I had 2 yrs left on my consumer proposal, with the 2nd mortgage offer by Matrix Mortgage Global I was able to pay off the proposal and re-establish my credit

Steve Darcy - Surrey, BC

Steve Darcy - Surrey, BC

I own a historic mixed use commercial/residential building that I wanted to modernize. Matrix Mortgage Global provided me with a term loan to complete the renovations

Blake Taylor - Banff, AB

Blake Taylor - Banff, AB

I own a family bed and breakfast just outside Banff and ran into some tax arrears. Our bank turned us down for a commercial loan. Matrix Mortgage Global provided us with a 2nd mortgage which we used to pay off the tax arrears.

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