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Private Mortgages in Vancouver

What are Private Mortgages?

If you are turned down by a Bank and by an Alt-A or ‘B’ Banks as well, then the third option is a Private Mortgage.

Private Mortgage lenders or investors are common sense lenders, but they do have specific guidelines to follow. If there is enough lendable equity in the property and a strong exit strategy, they can usually fund the mortgage in Vancouver.  Because these lenders are taking on a higher risk, their rates and fees are higher than the Alternative Lending Mortgage Rates.

Sources of Private Mortgages

There are two sources of Private Mortgage money in Canada. One is a Mortgage Investment Corporation (MIC) or a Mortgage Trust and Private Individual Investors.

1. Mortgage Investment Corporations

Naturally, your Mortgage Broker should and will try to get you approved by a MIC. For one, the Mortgage Rates are lower with a MIC. Most MIC’s have no prepayment penalty; no performance fee; fees and mortgage rates are competitive. Above all, most MIC’s will renew your mortgage for another year for a price as low as $250.

2. Private Investors

If you do not qualify for a mortgage from a MIC, then your last resort is a mortgage from a Private Investor. Most Private Investors looks for the same qualification as a MIC but can be flexible. That flexibility comes with a higher rate and fees. A cautionary note for you. Never sign a Mortgage Agreement that has “Performance Clause.” More than likely, you will lose that money. Go with a different investor.

Short-Term Mortgages to Help You Improve Your Financial Situation

Private mortgages are a temporary solution to your situation. Private Mortgages are also known as band-aid loans as these are short-term mortgages that help you buy time to improve your credit and income situation in Vancouver. So use the time that a private mortgage buys you wisely to improve your credit score and financial situation otherwise a year will go by before you know it and you will end up paying the same high rate. The whole idea of a Private Mortgage is to buy you time to get back on track within a year or so.

By Jeet Singh
Jeet Singh is a writer and a Mortgage Advisor. He can be reached at [email protected].