A private mortgage is one where a buyer secures a home loan from another person (friends, family, associates, etc.) or business rather than borrowing from a traditional source such as a bank or other similar financial institution. This may work for you, but there are many things to consider before moving forward on your own. Some are normal in any mortgage scenario, some are not.
Everything to Consider Before Committing to a Private Mortgage
- Is there a legal loan document ready for your review?
- Can you live with the amortization terms? Please note that loans on private mortgages often have much shorter terms than what traditional lenders are willing to agree to. Banks can afford to wait, friends and businesses may not.
- Does the lender offer fixed and variable rates?
- Is there a renewal clause?
- What are the penalties on late payments and defaults? What exactly is considered a default in the agreement with them?
- Can you get out of your existing agreement if you’re able to refinance at a better rate? Will there be a penalty if you do?
- Are you permitted to seek independent legal advice prior to agreement? And will the documents be signed at your legal representative’s office or neutral ground?
- Is there a title transfer required?
- Other. There many things to consider – call 250.493.9111 to inquire.
As you can see, there is a LOT to consider. Entering into a private mortgage alone can leave you exposed to a number of financially crippling vulnerabilities. But with the help of a professional team that has vast experience in working with buyers and private lenders (which we can also recommend) you can instead leverage a tremendous opportunity that traditional big banks and credit unions can’t offer. But again – it all starts by securing the services of a brokerage so that you have someone in your corner. If you’re considering a private mortgage in Penticton BC, then Carloni Mortgage Brokers is your only option.