What is a Private Mortgage
The only difference between a regular mortgage and a private mortgage is, that the private mortgage can be sourced from another person or business, instead of reaching out to a bank or other finance provider. A prospective homeowner will go to an independent and private lender to obtain the mortgage, instead of a bank. By doing so, the homeowner will get greater flexibility for the use of borrowed funds through the private lender. Private lenders also are able to customize the mortgage to the homeowners’ requirements.
Who is Eligible?
Most people still prefer to opt for a regular mortgage, gained through a bank or another finance provider. They still are the most popular mortgage providers in the market. The people who find it hard to qualify with banks and credit unions, such as the following can get a private mortgage:
- Property investor looking for fast cash.
- Self-employed borrower, with assured upcoming income.
- Someone with a poor credit, who will not necessarily qualify with a traditional lender.
- Option for interest only payment for borrowed money.
Private mortgages are for people who fall into the aforementioned category. Depending on the mortgage plan you make with your lender, if you can make the payments easily and on time then you qualify. It is more property centered as compared to person centered, if the project the private mortgage used for shows promise and potential, then it is not hard to get a private mortgage.
These are the reasons why many people opt for a private mortgage:
- Easy to qualify: As mentioned before, it is easier to qualify for a private mortgage than a traditional one. Even if you can’t provide proof of a steady income (in the event of being self-employed).
- Perfect for investor willing to renovate and sell: If you’re planning on renovating your newly purchased home, and then selling it further, then private mortgage is the thing for you. Private Mortgage providers give the option of a short payment period, allowing to get done with the payments and carry on with your plans. This one is a favorite among realtors looking to refurbish properties and then selling them.
- Short Approval Process: Traditional mortgage loans take up to 30 to 45 days of approval, whereas private mortgage loans can be processed and approved within a couple of weeks. In the event that you would need the loan quickly, then a private mortgage is the best option to opt for.