The most obvious application would arguably be for funding a residential mortgage requirements where the applicants fail to qualify for an institutional mortgage due to some combination of bad credit and strained cash flow.
A private mortgage, by definition, is a home equity loan due to the fact that the primary lending and funding criteria revolve around the equity in the property being offered as security and where credit and cash flow are more secondary issues.
But there are other situations where a private mortgage may be the preferred choice, even in scenarios where the borrower(s) can qualify for a residential bank mortgage.
For instance, any situation where cash is required in less than two weeks, a private mortgage can be the only option as its too unpredictable as to whether or not an institutional lender is going to be able to move fast enough. And if cash is required to complete a transaction or avoid some sort of penalty or opportunity loss, then the incremental cost of a private mortgage may be very small in the overall picture of what is at stake for the borrower.
Another very common situation where private mortgage financing on home equity is very popular is in construction financing scenarios.
Once again, the borrower may very well be able to qualify for bank financing, but chooses private funding instead to the benefits it has to offer.
More specifically, private mortgages for residential construction can be arranged, on average, faster than from a bank with more predictable draw advance schedules that are typically key to the an uneventful cash flow during the construction period.
In both the cases of borrowing speed and construction, there is an additional cost for private mortgage financing, but there are also added benefits that come with the cost.
Those added benefits typically revolve around speed, flexibility, and predictability that are not always available through lower cost lenders, especially in the time you have to get something arranged.
So if you are looking for a home equity loan and want to better understand both your bank and private lending options, I suggest that you give us a call and go through your situation with a member of our team. We’ll make sure we get all your questions answered right away as well as providing you with a list of the most available solutions for your particular situation.