Many times when trying to get a mortgage loan, homeowners often go through challenges. The traditional lenders may pass on your request and sometimes it may just not make sense. That’s why when it comes to credit, many people turn to private mortgage lenders for bad credit.
Although there are many negative things said about the private lending industry, those are often said by those that have defaulted on their payments. It’s not a secret that interest rates are typically the highest from private mortgage lenders for bad credit. This is expected because of the risk associate with approving a loan for borrowers with bad credit. That’s why borrowers that look at private mortgages are those that have been declined by traditional sources such as banks and other institutions.
Private mortgage lenders for bad credit are interested in equity as a security and the borrowers “exit Strategy” for repayment. Since private mortgages are held at higher interest rates. These mortgages are meant to be short-term solutions. An “exit strategy” is the borrowers plan on repaying the mortgage by the end of the term (usually 1-2 years). Mortgage private mortgage lenders for bad credit are repaid either by refinancing their mortgage through an institutional lender (“B”) or by the sale of the home. The following are some examples we’ve seen of homeowners seeking private mortgages who also have bad credit:
- Ongoing legal fees for a Divorce/Family dispute
- Children’s tuition/education
- Down payment for another property
- Consolidate debts/repair credit
- Family emergency
- Health/medical reasons
- Mortgage arrears
- Property/income tax arrears
- Title transfers
There are many other examples and reasons that would incline homeowners to seek private mortgage lenders for bad credit, but these are just to name a few.
We often see clients surprised at the idea of paying higher interest rates for private money when alternatives are available but often remind them that there are always circumstances and situations that prevent those alternatives from being available options. Home owners see value in private mortgages especially when options are limited. However, when options are available outside private solutions, people would still explore them before making their decisions.
If you are interested in learning more about private mortgage lenders for bad credit or are interested in applying for a mortgage solution, contact us today.