There can be many reasons for having to get a private or B lender mortgage. Some of the main reasons are the following:
- Damaged or bad credit
- Past bankruptcy or consumer proposal
- No credit
- Thin Credit (Haven’t had credit for very long)
There are many reasons a client or clients may need to get a higher priced mortgage or private lending mortgages but the main point to remember is that it is still possible to get a mortgage at that point.
This will usually involve at least 20% or more equity in your existing property if you are looking to refinance or 20% or more down payment if you are looking to purchase.
The way I usually approach this with a client is I will first establish there are no other options for them through a full evaluation involving a meeting, credit check, income verification and assets or a possible co-signer. There may be other scenarios to explore as it depends upon each client’s specific situation.
Just because you have been declined at one bank or mortgage broker does not mean you will be declined for a mortgage with us.
We are usually working on several files a month where the client has been previously declined somewhere else. This does not mean we are able to make every situation work but we will have a solution for you whether it be working with us to improve your credit or another way to put yourself into a better position.
If you do have to go through a B lender or private lender here is the outline of the process:
- The rate will be higher than regular banks, usually in the range of 4% – 10% depending on credit, location, down payment and other factors.
- There are fees charged if the loan goes through, usually 1% of the loan amount and up depending on the lenders risk profile
- An appraisal will be needed
- Most lenders will only go up to 75% of the value of an appraisal but some will go up to 85% if in a major city
- Most terms are 1 – 3 years
The goal would be to refinance with a regular bank for better rates as soon as the term is up instead of renewing and we would position you to do so.
I hope this helps with anyone who is in a tougher situation and know that there are solutions for you!