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Really…? Does this really exist? Yes and No. Now, every Mortgage has payments, but if the equity is right a private mortgage can be structured where a borrower will have no payments for a year or more. Who would need this, and what type of Lender would allow this? Before answering, it’s best to explain the difference between a traditional type bank mortgage and a private mortgage, and how a private mortgage lender can satisfy a specific need.
Most banks and similar type lenders need to satisfy some strict and stringent lending criteria… such as Stress Testing (Affordability), Meeting Minimum Credit Score Requirements, Income Verification, Income Stability etc. Furthermore, the banks are not willing to cross a line too far from the standard norm. This is the primary reason why banks and similar type lenders are unable to process unique financial transactions.
However, Private Mortgage lenders in Canada are willing to go ahead with such transactions based on the location and equity of the home. Private mortgages in Canada come in very handy when major financial institutions or banks are not willing to go ahead with the transaction. Provided there is enough equity (Usually 25% or greater in urban centers), different short-term solutions can be processed to get a property owner from point A to B, with eventual plans to pay off or refinance their private mortgage once life’s circumstances have stabilized.
If you’re a homeowner that has worked hard paying down your mortgage, but now find yourself in financial crisis, a private mortgage may be the perfect solution to stay in your home as opposed to selling. Situations can range from Loss of Employment, Sudden Stoppage or Decline in Self-Employed Income, Unforeseen Medical Bills. Private mortgage funds can be used for any purpose…even paying off a consumer proposal or an outstanding balance due to a trustee after a bankruptcy term. Now to answer the question on who would need a no-payment mortgage, it’s best to look at 2 recent case study examples of customers we recently helped:
Case Study 1:
A woman in her late 50’s that had excellent employment with a college in her city was recently laid off and was having trouble making ends meet. She was a recent divorcee as well so didn’t have the two income support she was accustomed to. Being responsible and proactive, she addressed the Dower Rights Issue with her lawyer and ex-husband in advance. The problem was that with no income coming in and not enough EI coming in she simply couldn’t make ends meet. She did know that she had a property that was valued at nearly $1M in a very desirable neighborhood for developers, with little owing. She had approached her bank first, and other institutional lenders but due to the lack of monthly income, she would not meet bank requirements… not to mention that her credit had taken a negative hit.
She approached our company in need of private money to clear her debts, and provide some much-needed income support for 12 months. She also requested to have no payments for a year while she figured out her next career move. Due to the equity, we were able to incorporate her payments into the mortgage so that she could focus primarily on getting her life back on track without the stress of making mortgage or unsecured debt payments. Her plan is to return to work with cleaned credit, and refinance with a traditional or semi-traditional bank. If more time is needed, a renewal would be provided to assist her in getting to eventual Point B.
Case Study 2:
Having fallen under hard times like many Albertans, a young Union Trade Worker reached out to our company for assistance. He was nearing at the end of his EI and did not have any work lined up with his union to withstand the upcoming financial commitments. His home was also in need of some renovation work. He felt he had two options:
- Find temporary work that pays less, and struggle to make ends meet while leaving his home neglected.
- Take advantage of his equity and take out enough to provide financial stability for a year, renovate his house, and clear some minor debts.
He chose option #2 – It would be less stressful for him to be free of unsecured debts, while being able to complete the renovations with plans to return to work once finished. Due to the substantial equity, we provided him the option of making monthly payments or having no payments for a year. He chose to have his mortgage prepaid for a year. His plan is to refinance with his bank after he returns to work and has a good six months under his belt. In the event more time is needed, a renewal would be provided.
A private mortgage isn’t meant for everyone and must be obtained responsibly. If you need a short-term no-payment mortgage or a standard private mortgage, contact Amansad Financial. We have a very quick process that will allow us to determine what is available to you. When properly taken, a private mortgage obtained from Amansad Financial is the perfect bridge to take you from struggling to success… Point A to B financing.