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The Mortgage Guide

Utilizing Private Mortgages For Real Estate Investments


A private mortgage is a unique and special type of mortgage that is not commonly heard of. It is a mortgage contract wherein lender is either a family member, a friend or an individual investor instead of a traditional toiture financial institution.


Registered financial institutions such as banks and corporate lenders have rigid guidelines which tend to prevent them from financing certain borrower profiles and scenarios. Private mortgages, however, can cater to these unique needs. Some of the typical scenarios where an individual may need private mortgage financing include: private mortgage for real estate investing such as a cottage or other kinds of unique property, financing for construction and renovation projects, financing for individuals who have non-traditional sources of income, financing to recover from bankruptcy or debt consolidation, financing for people who have property or income tax issues and arrears, and many more. 


Lenders and borrowers can both benefit in private mortgage arrangement


For a borrower, a private mortgage is a great alternative to a bank mortgage that cannot be obtained. There are many reasons why borrowers opt for private mortgage: poor credit, property tax and income tax arrears, need for another mortgage, construction and renovation financing, investment in real estate properties that traditional banks toit do not consider valuable or prime, debt consolidation and bankruptcy recovery, and instances where an individual cannot prove a viable income. Private mortgages, however, should not be kept by a borrower for the long term as interest rates are considerably higher. Aside from this, it may not offer the flexibility and features a regular financial institution can offer.


For private lenders from this or those planning on becoming a private mortgage lender, it is good to know that you will not need to be a bank or a corporate lender in order to lend money. Anybody can be a private mortgage lender as long as it is arranged and coordinated via a licensed mortgage broker. Private mortgages can be a great investment that provides significant returns. Also, a private mortgage is a negotiable instrument which may be renegotiated, assumed and transferred as necessary. The investor or lender is also protected through a collateral in the form of real estate.


Whether you are an investor or lender, you will need a knowledgeable and licensed broker who specializes in private mortgages. Finding the right mortgage broker is very important in getting a successful private mortgage or acquiring interested private mortgage borrowers. You can also consider the idea of payday lending like what is discussed at