Understanding Private Mortgage Lenders: What You Need to Know

When lending institutions such as banks or B-lenders decline a mortgage application, borrowers often turn to private mortgage lenders. These lenders are either individuals, or small companies called Mortgage Investment Corporations (MICs). They provide an alternative route to getting a mortgage.

Private mortgage lenders are useful in cases where borrowers have issues. These issues include poor credit, unusual property types, or too little verifiable income. A private second mortgage could also be less costly than paying the penalty on a first mortgage.

Private mortgages are usually short-term solutions. They help borrowers to improve their finances and transition to a prime lender, or sell their property with better terms.

The Landscape of Private Mortgage Lenders in BC

In British Columbia alone, there are hundreds of private mortgage lenders. Among these, dozens are well-established companies with substantial funds available for lending. When you hear ads for easy mortgage approvals on TV or radio, it’s likely from a private mortgage lender. Despite the ads’ direct approach, a mortgage broker can usually find you a better deal.

The Role of Mortgage Brokers in Private Mortgages

With traditional mortgages, brokers receive a commission from the lender. However, mortgage brokers aren’t compensated by a lender for a private mortgage. Because of this, arranging a private mortgage involves charging the borrower a fee. This fee pays the broker for their expertise and efforts in finding a suitable mortgage.

Why Work with a Mortgage Broker Instead of Responding to TV or Radio Ads?

You might think that contacting a private lender through an ad would save you the broker’s fee. But, this is a common misconception. Brokers can often get better terms and lower costs. This is true for several reasons:

  1. Advertising Costs. TV and radio advertisements are costly. Private lenders who advertise through these channels add these expenses to their pricing. This raises the costs for borrowers.
  2. Brokerage Fees. Private mortgage lenders who advertise are themselves licensed mortgage brokers. They include broker fees in their cost structure. Borrowers end up paying these fees anyway.
  3. Tailored Solutions. Mortgage brokers work with a network of lenders and can find the best fit for your unique situation. In contrast, private lenders advertising on mass media platforms usually only lend their own company’s funds. The borrower doesn’t know any better, and is usually in an urgent situation. Thus, the loans from these lenders usually have a much higher interest rate compared to funds from a mortgage broker.

The Benefits of Using a Mortgage Broker

You gain access to a wide array of private lenders and mortgages by working with a mortgage broker. Brokers use their knowledge and contacts to find the best solutions for their clients. Here are the primary benefits:

  • Expertise and Experience. Brokers have experience with many lenders. They understand the details of private mortgages.
  • Customized Solutions. Brokers tailor their search to your needs. They ensure you get a mortgage that fits you.
  • Negotiation Power. Brokers can negotiate better terms for you. They have established relationships with many lenders.
  • Stress-Free Process. Brokers handle the paperwork and negotiations. They make the mortgage process smoother and less stressful for you.

A Compassionate Approach to Financial Difficulties

Brokers understand the financial strain that leads borrowers to seek private mortgage lending. They often approach each case with empathy and determination. If you’re facing debt, job loss, or other financial struggles, a broker can be an ally in finding a solution to regain financial stability. If you contact us, within a short phone call, we’ll give you one of the following responses:

  1. Positive Response. If we believe that we can help, we’ll guide you through the next steps to secure a mortgage.
  2. Quick Evaluation. If we can’t help, we’ll tell you why. We’ll also offer any suggestions that we think may help.
  3. Honest Feedback. If we’re uncertain about being able to help, we will explain why and let you know if we’d like to try.

Taking the Next Step

If you’re considering a private mortgage, contacting us is a smart first step. The consultation is free, and you only pay if the mortgage is funded. Our brokers’ expertise can save you time, money, and stress. They ensure you get the best deal tailored to your needs.

Contact us today to explore your private mortgage lender options and secure a mortgage that works for you.