Looking for a Private Home Mortgage Lender in Edmonton? Amansad Financial has relationships with private lenders in Alberta and all over western Canada who are looking to invest money in the real estate market by funding private mortgages. If you are ready to buy a home in Edmonton, the market has never been better. Prices have started to creep upward in the past year or so, but interest rates remain at historically low levels. You can take advantage of the fact that the economy still has not started to perk up enough for the rates to start to climb. This means that you can get a lot more house than you could have before the collapse of 2008 and 2009.
Finding a Private Mortgage Lender in Edmonton However, one of the biggest hurdles that people face when buying a home is getting financing. There are some people who can walk into closing and pay cash for a house, but that’s not the case for the vast majority of the home purchasing public. Most people will end up going through a traditional lender, such as a bank, to secure their loan. They’ll put down somewhere between 5 and 20 percent down (if not a little bit more), and the bank will run their credit history and look at their track record of income. The combination of those three factors will determine whether the bank approves our application for a loan. Many people have put aside a fairly large down payment, but they have run into some financial reversals in their past, and so their credit score isn’t where it needs to be.
In situations like this, a private lender can make all the difference and give you the funding you need to purchase that first home. However, there are a few things you should know about private mortgages before you make that commitment.
Private Mortgage Edmonton First, you’ll often need a down payment of 25 to 30 percent ready to go if you want to use a private mortgage lender in Edmonton, but in some cases, as little as 15 percent can work. The reason for this is that with a private lender, your credit is not the issue. If your credit were in the range to qualify your application for a mortgage, you could go through a bank. In this case, it is the value of the property that is what qualifies your loan (or not). If you are purchasing a property for $400,000 and have $120,000 to put down, making your private mortgage balance $280,000, the lender would take a look at the property and get an appraisal. If a sale could bring in $280,000 (in the event that you had to default), or more, then you would be approved.
Next, you need to understand how the terms of the loan work. With a conventional loan, you’re looking at amortizing the loan over anywhere from 15 to 30 years, in a series of renewable loans, since the longest you can sign a mortgage for in Canada is ten years. With a private loan, the term is not going to be longer than one or two years, with an option to renew. The lender will likely offer you the option to make interest payments only or to amortize it over a period between 25 and 35 years, making your payments smaller each month, but that means that you will have a balloon payment waiting at the end for that short term. The good news is that you can use this time to get your credit score up to the point where you can get approval from a bank to refinance the rest. A lot of the time, simply making those payments on time to a private lender for two or three years is impress a bank to move you toward approval, although a credit recovery specialist will be able to identify those elements in your credit report that need the most attention, so that you can get your score as high as possible before you apply with a bank again.
Are you finally looking to get out of that apartment in Edmonton and buy your first house, even though you’re self-employed and have a credit score that it less than pristine? Did you go through a divorce a couple of years ago, lose your house but gain all the credit card debt, and end up in a tiny condo, even though you have the means to pay for much more?
The good news is that, now that the panic around the mortgage market has started to settle down a bit, more mortgage options are becoming available to consumers these days even if you are seeing a bad credit mortgage in Edmonton. If you’re wanting one of those mortgages with a tiny interest rate from a bank, you might be out of luck for at least a short time, but the good news is that there are other options out there.
In the mortgage industry, we refer to traditional banks and other lenders that offer those prime rates as the “A” market. Other lenders that put borrowers through a similar process of qualification but offer rates that are a little higher (because they accept credit scores that are a little lower and income histories that are a little harder to verify) are known as the “Alt-A” or “B” market. However, one of the growing markets is the “C” lender, also known as the private lender. This is a company or even an individual looking to profit from the real estate market by funding mortgages at a higher rate of interest than what the banks get.
How to Get a Bad Credit Mortgage Loan in Edmonton
With the “A” and “Alt-A/B” lenders, your credit score, income history and down payment are the three factors that qualify you for a loan. With the private lenders, though, it’s all about the property. The lender knows that you don’t have the credit to get a traditional note, so he looks at the property and decides whether he can get his money back if you default. If he thinks he can, you’ll get your money.
So what’s the crucial part on your end? The down payment. Within greater Edmonton and the closest suburbs, expect to put enough down so that the loan-to-value, or LTV, ratio is 75 percent or less. How does this work? Let’s say that you’re looking at a house with a list price of $500,000. The appraisal comes back at $480,000, but the seller won’t budge. The lender looks at the value of the home as $480,000 rather than $500,000, because that’s what the appraisal tells him he can expect if he has to kick you out and sell it. So if the maximum LTV ratio is 75 percent, your maximum loan from that lender will be $360,000 (75 percent of $480,000). If you decide to pony up the full $500,000, you need to put at least $140,000 down to get funding.
Edmonton Bad Credit Mortgage Lenders Amansad Financial does have relationships with some private lenders who will go as high as 85 percent LTV, or even 90 percent, if you are buying in the right parts of Edmonton. However, if you’re looking out in the country, plan to put 35 or 40 percent down (although some lenders will allow 75 percent LTV depending on the area). Are you just looking to pick up some land out in the hinterlands of Alberta? Be ready to put down half, as the maximum LTV ratio you’re likely to get is 50 or 55 percent.
Because your credit score doesn’t come into play, the appraisal is the major player in your approval. However, it often doesn’t pay to run out and get your own appraisal, because a lot of lenders turn up their nose to client-sourced appraisals. You’ll need your mortgage broker or lender to run an appraisal in the majority of cases. Other documentation is helpful, too, of course. Even though your credit score isn’t part of the equation, if you have solid verification of an income level that will make it easy for you to keep up payments on this private loan, you should submit it. The more paper you have showing that you’re a good borrower, the more likely you are to get approval. Remember — the lenders are looking to make money, and they don’t make money by turning you down. Look at it as a process of convincing the lender to give you what you want.
If you want more information about access to bad credit mortgages in Edmonton, give one of our specialists at Amansad Financial a call today. We will discuss your options and recommend several lenders to get you started.
If you think that working with a private mortgage broker or lender in Edmonton is something that will interest you, Amansad Financial has relationships with companies and individuals all over Canada who are looking to invest money in the real estate market. They can get a decent rate of return without having to take the sort of risk that comes with buying stocks or investing in futures. There are many properties available for sale in Edmonton right now, which means that the market is ready for a motivated buyer to come in and get a quality deal. Give Amansad Financial Services a call at 1-877-756-1119 to discuss your options today.