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Private Mortgage

Need a loan with flexible lending criteria and negotiable terms?
Need it done fast? Are you a first time home buyer? We can help!

 

WHAT IS A PRIVATE MORTGAGE? 

Essentially, this type of mortgage is one that is provided by another person or even a business rather than the traditional route of choosing a bank. At times, it might be the only option left after getting rejected from a bank already. However, some people prefer this over borrowing from a finance provider. 

 

Ultimately, a private mortgage doesn’t have the same restrictions as a traditional mortgage from a bank. With this in mind, it often offers more freedom and flexibility depending on whether the finances are coming from an individual or perhaps a business. Despite these differences, there is one key premise that makes the deal worthwhile  it must have a ‘win-win’ element for all parties. On the one side, you have a borrower that is getting the money to buy a house or whatever it might be used for. On the other hand, you have an individual or business taking a risk with their money. As long as there is a return in place for them, it becomes worthwhile and the risk remains low for both.

 


 

WHY CHOOSE A PRIVATE MORTGAGE?

Before we head into some precautions for private lending, we should first assess why this is necessary in the first place. Surely the mortgage industry has been set up so that private lending can be avoided and everyone has a chance to borrow money and begin their new life? Well, there are a couple of examples where private mortgages may be necessary as you will see below.

 

 

Help Friends/Family

This works both ways and the obvious ‘help’ comes from the lender who is choosing to provide their own money for their friend or family member. However, the borrower is also helping the lender and this comes back to the ‘win-win’ situation we discussed a little earlier. How? Rather than paying expensive interest to the banks, the interest will now be paid to someone you know. With this, you know that the money is doing good on both sides which is great news.

 

 

Qualifying Problems

Aside from this, it could be the rules put in place by the traditional lenders that mean private mortgages are the only option left. During the application process, there is a significant amount of paperwork and a good amount of information needs to be provided before they will even consider you as a recipient of a mortgage. If you’re self-employed or still young, it can be difficult to get the right paperwork in place. When this happens, there is very little option but to either give up or choose a private option.

 

 


 

TIPS

As we have promised all the way through, we also have some tips for your agreement and this will allow you to make the

agreement formal and keep both parties in a strong position moving forward. 

 

Make the Agreement Official

One of the worst things that people do with a private mortgage is fail to make it official or get the agreement in writing. In truth, both the borrower and the lender should want to have it in writing because it provides a layer of protection that otherwise wouldn't exist. When formalizing the process, you should use a promissory note as well as registering the mortgage loan with the local authorities and the IRS. After the property has been purchased, the deed can also go to the necessary bodies.

 

Furthermore, you should be looking to have a mortgage deed for the security of the loan. If the borrower was to pass away, there wouldn’t necessarily be a link in place to the lender. Therefore, this security ensures that the lender takes ownership of the property if the borrower dies. Once this agreement is in place, it keeps everyone happy and it ensures that everyone knows the rules in place when it comes to repayments, interest rates, and more.

 

Interest Rates

On the topic of interest rates, this should be something you decide in advance and stick to once the agreement is in place. Immediately, you might think ‘hang on a moment, I am borrowing money from family so there doesn’t need to be any interest added!’. However, there are two key reasons why interest is essential;

  • Firstly, the lender is protected against inflation. If there was no interest involved, the amount of money would be worth less when it is returned than it is now and the lender loses out.
  • Secondly, interest is also beneficial for the borrower because they can enjoy the tax benefits. If there is no interest in place, the borrower will not qualify for home mortgage interest deduction.

As you can see, having no interest in place actually causes both parties to lose out so this is something that needs to be agreed. Once a figure is discovered that beats inflation and allows for qualification for the tax benefits, this can go into the official agreement as we saw previously.

 

Contingencies

Before the agreement is confirmed, there should be a discussion as to what happens in various circumstances. For example, what happens when a payment is missed? Can the loan be restructured in any way, if required? If necessary, this is the best time to contact an attorney because they will assess your agreement and give you tips on how to improve or make changes. If the attorney gives your contract the go-ahead, you can be fairly confident that the agreement is a strong one.

 


 

Purchase A Home:

  • We Don't Need Your Credit Score or Income Statements
  • Get Approved Within 24 Hours
  • No Penalties to Pay Off Your Mortgage Early
  • Interest Only Payments
  • Finance Luxury Properties

Investing in a mortgage for the first time is the best way to begin to build your own personal equity. Benson specializes in residential private mortgages in Ontario. If you're ready to buy property and you've had a hard time getting approval from the banks, talk to us! We have a wide variety of financing options available and are happy to sit down with you, access your financial situation and offer you a variety of customized solutions to choose from in order to meet your goals. Our simple and straightforward process makes it easy for you to finance your new home. Just tell us which property you're interested in and we'll help with all of the financing paperwork, and secure your mortgage. 

 

CASE STUDY:

Financing a Luxury Condo


Home Value: $1,070,000
Current Mortgage: $0
Need: $770,000

 

Challenge

Client purchased a luxury condo pre-construction, and put forth a $300,000 deposit

 

In the time it took for the condo to be build, the client went through a difficult divorce that left his finances in disarray and bruised his credit history

Volatile values make these types of properties undesirable for major lending institutions

The client had lots of skin in the game and it was too late to walk away from the deal

Solution

1st mortgage for $ 790,000

 

Manageable monthly payments and a completely open term

Client did not lose his deposit

Property was sold at a premium and the client paid no mortgage prepayment penalty

 

If you're considering getting a mortgage in the Ontario Canada area our private lenders make it easy. We work with a large pool of lenders and have access to bulk discounts that allow us to offer you the very best deals in the province.

Call us for a free consultation! 416.477.5500

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Testimonials
  • Understanding all of the current rates and legal issues with buying our first home was overwhelming before we came to Benson. They sat down with us and took the time to explain everything in terms we could appreciate and understand. They alleviated the stress we were feeling and allowed us to get approved for our dream home when we thought it was impossible. Much gratitude, we would highly recommend them!
    Kate & Charles D.,
  • In the same week a freak storm took out my sunroom and car with a fallen branch. My insurance wouldn’t cover it and I didn’t know what to do. Benson offered me rates I could actually afford, and provided me with the loan I needed with almost no questions asked. What a life-saver!
    Anthony P.,
  • I was impressed at how quickly my pre-approval went through. The level of service and rate info was outstanding, much better than dealing with a bank directly.
    Alex, Vaughan, Ontario
  • I am so grateful to you guys. I just cannot thank you enough for the job you did on my mortgage. I am not sure how you did it but the interest rate you got me is even better than my bank offered me. Excellent job!
    Mrs. Svetlana K., North York, Ontario
  • My wife and I would like to personally thank you for the great service you and your company has provided us with regards to our mortgage needs. We previously signed up with big bank insurance company for many, many years.
    Eugene and Ann L., Thornhill, Ontario
  • Refinancing our home with Benson was one of the best financial decisions we ever made. We paid off thousands in credit card debt, added on a new deck, and only increased our regular monthly mortgage payments by $200! The amazing interest rate that these guys negotiated for us took the stress out of the over 18% interest rates on our credit cards! I cannot thank you enough for the feeling
    Dan G.,
  • I experienced such great customer service! Benson made it easy for me to get the help I needed and explained everything to me in a completely transparent manner. Clearly if you are in a situation where you need this service, you’re incredibly grateful for any kind of stress reduction and to have professionals on your side that are truly helpful.
    Kim H.,
  • In the same week a freak storm took out my sunroom and car with a fallen branch. My insurance >wouldn’t cover it and I didn’t know what to do. Benson offered me rates on construction financing that I could actually afford, and provided me with the loan I needed with almost no questions asked. What a life-saver!
    Anthony P.,
  • The flexibility and support Benson offered us for our commercial development investment was impressive. We were able to secure the funds we needed with minimum hassle, and the payment plan they structured for us fits precisely with our business model. They offered us far more flexibility than we could have found working with any bank on this construction project
    Micheal P.,
  • Thank you so much for helping me and my family. You did something no one else could - found me a rate that was optimal to my employment status. I never knew that comparing mortgage rates was this easy!
    Paul T., Richmond Hill, Ontario
  • I just want to thank you for hooking me up with a comprehensive and affordable quote for my mortgage. You have made it very easy for me to make a decision and save thousands of dollars on low-rate mortgages.
    Linda K., Toronto, Ontario
  • With my credit history haunting me I didn’t think that I would ever be able to build my equity back by owning my own home. I got referred to Benson through a friend and after sitting down for a very detailed financial conversation I walked away with a private 2nd easily manage. Thanks to the whole Benson team!
    Mark T.,
  • I just wanted to pass along a big thank you as I was very impressed by the level of service I received from Benson Mortgages. I will definitely recommend you to everyone I know!
    Andrew J., North York, Ontario
  • With my credit history haunting me I didn’t think that I would ever be able to build my equity back by owning my own home. I got referred to Benson through a friend and after sitting down for a very detailed financial conversation I walked away with a private mortgage in hand, with payments I could easily manage. Thanks to the whole Benson team!
    Mark T.,
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