What are the Top Reasons to use Private Lending and Second Mortgages? -Your credit history stops you from being approved by traditional banks and credit unions -You Need to payoff CRA, Income Tax, GST, or Property Tax Arrears -You are behind on Mortgage Payments, or in Foreclosure and need a "bailout" -You cannot prove your income -You want to buy an unusual property (bad condition to be renovated, bare land, mixed use) -You need a quick approval -You need a short term solution Types of Private Lenders -Individuals - Individuals willing to loan their personal cash seeking a return on their investment -Syndicate - A group of individuals who pool their money together -Mortgage Investment Corporation (MIC) - A group of investors, typically larger corporations than individuals or syndicates. Also often have the lowest rates Characteristics of a Private Mortgage Interest Rates 4.88% - 11%* Lender/Broker Fees 1-5%** Term 6-36 months Amortization 25 years or interest only *on first mortgages, situations may arise such as second mortgages where rates are higher. On accepted credit, rates subject to change without notice. **Fees are approximate but may change based on situations and size of loan Example of a Private Mortgage Lets assume our borrower has run into some financial troubles, and has had to use personal loans and credit cards to get themselves through during a job loss. They have found a new job, but their credit suffered and they no longer qualify at a bank. They have a first mortgage at a bank for $150,000 with a payment of $780 that is coming up for renewal in a month, a car loan for $40,000 with a payment of $790 per month, and 4 credit cards with a combined balance of $20,000 with a minimum monthly repayment of $600. They also want to borrow $2000 to renovate their bathroom. Their home is valued at $300,000. The lender and broker fees are 3% of the total amount borrowed, legal fees are $1400. Current Monthly Liabilities - $2170 New 1st Private Mortgage - $195,000 - 4.88% - interest only - $785 per month New 2nd Private Mortgage - $25,000 - 12% - principal and interest - $257 per month Our client is saving $1128 every month for 1 year. A total of $13,536 With all this extra free cash flow, the clients were able to obtain 2 secured credit cards for $1500 each, and managed their credit well during the year. At the end of the year, showing clean repayment history on their credit cards, and mortgages, they were able to return back to a bank for regular lending rates. What Criteria are Private Lenders looking for to qualify a client? Private Mortgage Lenders are mainly interested in the property. Generally they allow up to 75% of the homes value to be borrowed, in some cases up to 85% (at a higher rate). Because they have a large equity position, many private lenders do not ask for proof of income. Just an appraisal to confirm the value of the property. Private lenders will want to see a copy of the clients credit bureau, however they will lend in virtually any credit situation..
Do any of these situations look like yours? Whether you have perfect credit, or have serious credit issues, WE CAN HELP.
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Chris Friesen        204-999-2194

Mortgage Professional

Winnipeg, Manitoba, Canada                 Email Chris