A private mortgage is a short-term solution (usually 1 or 2 years) at a much higher interest rate in an extraordinary situation, when you cannot qualify for a regular mortgage.
It is better to avoid private mortgages, as their rates vary between 7% and 18% per year, however, sometimes it can be a useful tool to improve your financial situation and avoid foreclosure or bankruptcy.
The main difference (except the rate) is that getting a private mortgage is much easier than conventional qualification.
There is no credit or income verification, therefore, you can have a poor credit history; but you need to have 25% of the equity in your house. Also, the better your credit score, the better the rate you qualify for.
You may consider a private mortgage if:
– You have a poor credit score and you need to pay off debts to improve your credit rating in order to refinance
– You don’t have income from Canada
– You need to finish renovations and then sell your property
– You need the construction mortgage
– You need to avoid bankruptcy
I am working with many private mortgage lenders in all provinces and can always help to find the best solution in your situation. I will do my best for you to avoid going this route, but sometimes it can be the only solution.