First Time Buyers and Private Lenders
Most private lenders will lend to first-time home buyers as well. That being said, though, you may still not be able to get a mortgage with a private lender if you have bad credit. There is a reason for this. As a first-time home buyer, you are allowed to put as little as 5% down on a home. Mortgages that have less than 20% down payment are required to have CMHC insurance. In order to qualify for CMHC insurance, you need to have a credit score of at least 680 or higher,
The CMHC used to allow a credit score of 600, but it has just recently changed to 680. Mortgage rules are becoming stricter, making it much more difficult for first-time home buyers. That being said, depending on the amount you are purchasing a home for and putting down 20%, you may not be required to get CMHC insurance giving lenders more wiggle room when it comes to mortgage approvals.
Mortgage Rates with Private Lenders
Private mortgage loan rates often have slightly higher percentage rates than that of traditional lenders. On top of that, they also change their rate based on the LTV (Loan to Value) ratio of the mortgage. This is how much you are borrowing compared to how much the home is worth.
The lowest rate using a private lender will be under 60% LTV; it will be slightly higher with an LTV of 70%, and the highest will be with an 80% LTV. Anything higher than that is quite risky for private lenders, and they are very unlikely to lend with an LTV higher than 80%.
Along with the mortgage rate, for a first mortgage, there will usually be a lender fee of around 1.5%, with that number rising up to 2% for second mortgages. These rates are on top of the 3%-6% broker fees. This alone puts rates 3-4% above traditional lenders.
Private Lenders and B Lenders
While private mortgages are considered to be B lenders, B lenders range wider than just private lenders. They also include some credit unions and a wide range of different alternative lenders. While many B lenders do not advertise to the public, private lenders don’t at all. The most common way to get a loan through a B lender is by using a mortgage broker.
Mortgage brokers go take your information and use it to reach out to A and B lenders. These lenders then will then let your mortgage broker know if you are approved and what the rate and payments will look like. From there, you are able to decide which lender you would like to choose for your loan.
The important thing to keep in mind if you have to go with a private lender or B lender is that it isn’t always more expensive than a traditional bank. Sometimes there are just extenuating circumstances for the bank being able to lend to you. An example of this is mobile home mortgages. These types of mortgage loans normally are done through private and B lenders. Most traditional banks do not lend for these mortgages because the land isn’t usually owned.
Mortgages with Private Lender Inc. @ MortgagePRO Ltd.
When going through a bank or a mortgage broker isn’t an option for you, or you are looking for an alternative lender that can help you get the money you need fast, MortgagePRO Ltd. can help. We specialize in loans for those with all credit scores and can get you your money as soon as the same day you are approved. But did you also know that we do mortgages? That’s right! Whether you are looking to consolidate your debt, tap into your home’s mortgage, refinance your mortgage or purchase your first home, we can help.
Another great thing about our financial products is that they can help you increase and maintain your credit score.
If you are looking to consolidate your debt, you can apply online for an equity loan. If you are looking for a mortgage, apply now and let one of our licensed specialists guide you through the process. You are also welcome to give us a call at 1-403-253-2022 or connect with one of our agents through chat box on our home page.