A Private Home Loan Can Be Your “Yes” When the Banks Say “No”
Use the Code Below to Embed this Infographic into Your Website!
Obtaining a home loan is easy for some people but seemingly impossible for others. A lot of that has to do with the list of qualifications that banks and similar institutions require applicants to meet. There are plenty of good people who have the ability to manage a home loan properly but don’t meet those qualifications. That’s where the idea of seeking a private home loan makes sense.
Understanding How This Loan Option Works
Private lenders take a different approach to evaluating the situation of each applicant. Instead of a laundry list of requirements that lead to a quick acceptance or rejection, the lender is interested in knowing more about how the applicant earns a living, the plan for making the payments on time, and the general prospects of being able to keep those payments up for the duration of the loan.
Unlike more conventional lenders, there is less emphasis on credit history. What happened a few years ago to drive the credit score down is not as important as how well the applicant has been doing financially over the last year or so. By taking a broader approach to the lending process, it’s possible for an applicant to obtain a Toronto second mortgage to cover the costs of making repairs to the home or using the funds for just about any project.
Help with Rebuilding Credit
The fact that private loans can aid in rebuilding credit scores should not be overlooked. Once approved, it’s up to the client to make those payments on time. When that happens, the private lender reports the activity to the major credit reporting bureaus. Over the life of the loan, the credit score is likely to improve significantly. By the time the debt is settled, the borrower will no longer have to consider only poor credit mortgages. Even the more traditional banks and lenders will be more likely to approve financing in the future.
What About Self-Employed Applicants?
It’s not always about credit problems in the past. Traditional lenders like applicants with incomes provided by steady jobs. There is an assumption that the employment will continue without any interruption. The same cannot be said for self-employed applicants.
A private lender who is willing to extend a home loan will take a broader look at the applicant’s income stream. Being self-employed does mean peaks and valleys in terms of revenue collection but an individual who is managing to keep all other obligations up to date does present a good risk to this type of lender. When the banks choose to turn the individual down because there is some fluctuation in month to month income levels, a private lender is more likely to focus on the average annual income, note how well the applicant is doing with keeping the bills paid, and approve the loan.
Don’t assume that just because the bank rejects an application that obtaining a home loan is out of the question. Take the time to learn more about loans from private lenders, how they work, and why they could be exactly what you need at this point in time.