The Self Employed and Private Mortgages

When you’re self-employed, a private mortgage can be your best friend. Private mortgages are loans that are financed through a private individual or organization that are not a bank or other lender. You may have seen advertisements for homes with the banner ad “Owner-Financed” splashed across it – that’s a simple way of saying that property comes with the offer of a private mortgage. And when you’re self-employed, it can be just what you’re looking for.
Private mortgages are perfect for those who would have difficulty obtaining a conventional mortgage – those that don’t have great credit, don’t have much of a down payment, or those that are self-employed. Because the loan is private and therefore based only on what the private lender requires, it’s much easier to obtain a private mortgage, especially when you’re self-employed. A private lender is much more likely to offer a loan to someone who’s got a strong business (but no verified income) than a bank would be, simply because the bank already has protocol set in place that borrowers must follow.
However, there is a trade-off. Because private lenders will be taking a bigger risk than the banks, they’re also more likely to charge you a higher interest rate than the banks would, also known as a high-ratio mortgage. This is often the case when self-employed individuals can’t verify their income. If however, you can and there aren’t a lot of things standing in your way of a conventional mortgage, a private mortgage could still be a better opportunity as in this case, the interest rate would likely be equal or similar to what you’d pay at a bank.
The biggest problem with a private mortgage is not usually getting one, it’s finding one. How often after all, do you see those “Owner-Financed” signs? One out of every twenty ads simply is not enough to get you the property – or the deal – that you need. Mortgage brokers Ottawa do, though. Mortgage brokers Ottawa have an extensive network of not only conventional lenders, but private lenders too! So often people think that private mortgages must be obtained privately, but that’s not the case. A mortgage broker is anyone’s best bet in getting the best mortgage out there for them – and that includes private mortgages for the self-employed too!
We hope you’ve been enjoying our mini-series on mortgages for the self-employed as we’ve delved into why it’s so difficult to get one, and the many (although not well-known) options that are available. Come back on Monday, when we wrap it all up by outlining the documentation that you’ll need in order to obtain a private mortgage, high-ratio mortgage, or any other kind of mortgage when you’re self-employed!