Many news outlets have published stories recently about the vast increase in the amount of private mortgages that Canadian’s are taking out in an effort to complete their real estate transactions or stay in their residences, increasing by 72% between 2019 and 2021. Many factors led to the increase in those taking out private mortgages, the boom in the housing market during the pandemic, the implementation of the stress test causing borrowers to have to qualify at much higher rates and not being able to qualify with traditional lenders due to credit or income.
While this is in the news, people have to realize that private mortgages are NOT long term financial solutions. They are short term bridge loans, meant to take you from point A to point B as quickly as possible. That’s it! If advised property and taken with the correct amount of caution then private mortgages are sometimes an ideal solution to help you get to where you want to go.
I have had clients use private mortgages to help them complete multi unit apartment buildings that were under construction, allow them to purchase a home as their current residence had not closed yet and also because their income did not allow them to qualify for traditional bank financing. They are a financial tool and when used wisely will allow people to reach their objectives. However they are not a one sized fits all solution. They are expensive and you are only paying interest payments on the mortgage. Ask lots of questions and know what you are signing up for, and most importantly plan your exit as to how you will pay off the loan in 12 months time.
It pays to have the right advice so contact me when considering whether taking a private mortgage is the right thing for you to do, and don’t forget to have your exit plan ready too.
Today I am thankful for a cool crisp run this morning to wake me up, another opportunity to sign up and do my annual ride for Cancer and private lenders who are trustworthy and provide a valuable service to my clients.
I look forward to hearing from you in regard to your mortgage needs.
p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2022-3000179) Broker (2022-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).
p.s.s.s You can download my new mortgage app here