CRE Magazine did a short overview on private mortgages. Among its notable points:
Private lenders look primarily at the quality of the property itself, your equity in it, and your apparent ability to repay to loan.
Your credit score is less important.
Location matters. “In inner-city Calgary, a property would turn over very rapidly, so we would be willing to go to 85% (LTV), whereas in small-town Alberta, we would look at what’s in that town and we might only go to 65%.” – Chuck McKitrick, CEO of private lending firm Alta West Mortgage
With private mortgages, CRE says: “you’ll pay higher interest rates and possibly broker/lender fees, and the term of your private mortgage won’t exceed a year.” (Note: sometimes privates will go longer, but you may not want to, given their interest rate.)
There’s a story to every borrower who uses private lending says MortgageLand’s David O’Gorman. “If there wasn’t a story, they’d be going into an institution to get their money.”
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