Private mortgages. Where they can be helpful.

March 29, 2024 | Posted by: Alex Vinarski

Private mortgages. Where they can be helpful. 

Private mortgages based only on equity in the property. Private lenders don’t need to see any income documents, and usually Ok with almost any credit. Most people take private mortgages as small second mortgages or HELOC ( Home equity line of credit) on their property for business development, renovation, children's education etc.


Two most common use private lender for purchase:

  1. When you bought pre-sale and can’t get a mortgage from the bank to complete the purchase. Take a private open mortgage, and sell the property ( or sell another property and pay off private mortgage). This is better than losing a deposit. 
  2. Some people want to sell and buy at the same time. Nobody will accept the offer subject to selling an existing home. One of the options is to make an offer, and if the offer accepted try to sell own house. If house not sold, take private mortgage for new house. When old house is sold, port mortgage on new houses or get new mortgage. Private mortgage can be open, so no penalty to pay it off at any time. Minimum down payment for private mortgage 25%, but the higher down payment the better rate. Rates for private mortgages from 7.9% with 2% fee. 
Beside private mortgages there are few programs with banks that can be helpful: Net Worth program ( where clients get mortgage based on their net worth, not income), Extended ratio ( clients get higher mortgage amount than they would normally get), Self-employed simplified- don't need to show tax return, only bank statements with deposits, this program also works for commission income, and even cash income ( realtors for example). 

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