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Private Mortgage Brokers and Lenders in BC
The banks are solely in existence for business and to make a profit.
This is great except that it is not always in your favor. Sometimes, in the bid to get loans and services, you fall short of their expectation which results in them backing out from helping you.
Unfortunately, this is a reality even in places like British Columbia (BC) in Canada where there is the relative ease of acquiring properties, especially when compared to some other parts of the country and world at large.
In situations when you do not have the right credit score or rating, you need a flexible option.
You need an organization that will be willing to accept your bad credit score and help out. Are there any such options?
Welcome to the world of private mortgage lenders in BC where you indeed have an option.
In this article, we will explain some important facts about private mortgage brokers and lenders in BC, as well as how they can be of help to you.
So, if you are thinking about getting a mortgage in this city or somewhere else, you should read on.
If you are also tired of going back and forth with the bank on securing that loan, you are at the right place.
But first, let us start by briefly explaining the concept of a mortgage.
What Is a Mortgage?
We always assume that everyone knows what some basic terms mean. This may not always be helpful as some may not.
To avoid making assumptions, we will start by looking at what we mean when we use the word “mortgage”.
Is a mortgage different from a loan?
In actual fact, the mortgage is a type of loan. However, while the term loan is used to describe a wide range of borrowed resources for various purposes, a mortgage is more specific.
It is used to describe funds borrowed to buy or construct a property. As a result, it is real-estate related.
Who Is a Private Mortgage Lender?
You may have heard the term “mortgage bank” or “mortgage banker” used a lot.
Some fortune 500 companies are active in this sector.
However, how is a private mortgage lender different?
Unlike the conventional banks in this business, these lenders operate in an unconventional style.
How is this?
Many people run to these companies for help when they are turned down by the traditional institutions.
This is usually because of bad credit which makes an individual a high-risk debtor.
For this group of individuals, these privately run companies are willing to lend to them despite their financial flaws.
However, this comes at a cost. More about this will be subsequently explained.
But first, let us find out the role of the mortgage broker.
Who Is a Mortgage Broker?
This official is the link between the borrower or debtor, and the lender. They are essentially the middleman.
Are the services of a broker really needed? Why not simply find a suitable creditor yourself?
Well, it is not as simple as it sounds. In the first place, the reason many people need private creditors is that they cannot meet the demands of the banks which are the conventional source of getting these loans.
As a result, many require the help of a broker. Brokers have a great deal of experience in the business and can help you get approval.
The services they will offer will include helping ensure that all necessary paperwork is properly filed.
What Is the Advantage of Using a Broker in BC?
Frankly, you can simply search for a private lender yourself since there are surprisingly tons of companies in this service. Why then should you use a broker?
The clear reason for this is their knowledge of the market.
Because of the experience and connections they have, a broker can understand your plight, search for several options, and provide the best solution.
Hiring a good broker in BC can be very beneficial to you. For example, with a broker, you can get an offer that allows you to buy a property without a down payment.
This is because of the broker’s knowledge of the companies that can offer such as well as their negotiating skills.
With a broker in places like British Columbia, getting a first or second mortgage is a lot easier.
Another thing you should know is that the interest rates of private creditors are not the same all around.
This is one of the reasons why using a broker is good. They will, in addition to other benefits, ensure you get the best offer(s) available.
For more on the benefits of using a broker, you can click here.
About Private Mortgage Lenders
At some point in this article, we mentioned that doing business with a private creditor is at a cost. Suffice it to say that it is at an extra cost. Why is this?
On the whole, private creditors will demand more interest rates than banks mainly because they are willing to offer services that banks will steer away from.
So, while you have them to thank for accepting you and your financial baggage, you’ll have to pay a price for this. The logic is quite simple.
Though these lenders are willing to offer loans to individuals who traditional institutions won’t touch, they do also consider the same factors that banks do in considering interest rates.
What this means is that there is no fixed interest rate as it will be determined by the applicant’s credit score.
This means MR A can borrow the same amount of money as MR B but pay higher interest rates.
A high credit score will attract a lower interest rate while a low credit score will attract a higher interest rate.
So, whether you are getting this service from a company in BC or Ontario, you should expect this.
This is one reason why private creditors are seen as complicated.
It is a known fact that many people run to these private lenders for a second mortgage.
After the first one, many banks refuse to approve a second loan. This makes sense though, leaving the individual who seeks a second mortgage with no other alternative.
To help ease off the first mortgage debt and move on with the project, the alternative that can be easily turned to are private lenders.
While these companies are likely to accommodate your request, you should however know that the interest rates on this second loan will generally be higher than the first.
This is something you should consider, along with the payment plan before agreeing to the deal.
For more on this, you can visit: https://www.theguardian.com/money/2007/may/16/expertsproperty.property1
On a Final Note
When it comes to securing loans for various purposes, many people cannot bank on the banks. This is where private lenders come into play.
Are you trying to get a mortgage in British Colombia? Do you have a bad credit score?
Even in places like this, getting the help of the commercial bank can be backbreaking.
It gets even worse when bad credit is added to the mix.
You should therefore give serious thought to dealing with a private creditor.
However, before you make any decision, you are strongly advised to work with a broker.
If you are concerned about paying the broker, there is little or nothing to get worried about.
Usually, these officials earn a commission from the lender.
This payment is calculated from the interest rate attached to your approved loan.