why might I use alternative or private lending instead?
There are several reasons why a potential homebuyer in Canada may not qualify for standard lending and instead opt for alternative or private lending. Here are a few reasons:
Poor credit score: One of the main reasons why a potential buyer may not qualify for standard lending is due to a poor credit score. If a borrower has a history of missed payments, high credit card balances, or has declared bankruptcy in the past, their credit score may be too low to qualify for traditional lending.
Insufficient income: If a borrower has irregular income or if their income is not enough to cover the mortgage payments, they may not qualify for standard lending. This is because lenders typically have strict income requirements to ensure that borrowers can afford the mortgage payments.
Self-employed: Self-employed individuals may not qualify for standard lending if they cannot provide the necessary documentation to prove their income. In some cases, self-employed borrowers may opt for alternative or private lending, which may be more flexible in terms of income verification. To note though, being self-employed is not a “death” sentence in the mortgage world, as some people still believe. There are many options available to self-employed persons and it can take working with a qualified broker to really see what option would be best for you!
Property condition: If the property in question is in poor condition, it may not qualify for standard lending. This could include properties that require extensive repairs or renovations. In these cases, alternative or private lending may be used to finance the purchase or renovation of the property.
Time constraints: In some cases, borrowers may need to secure financing quickly and may not have time to wait for the approval process of standard lending. In these cases, alternative or private lending may be a faster option, although it typically comes with higher interest rates.
Overall, alternative or private lending may be a viable option for those who do not qualify for standard lending. However, it is important to note that alternative or private lending typically comes with higher interest rates and fees, which can make the cost of borrowing more expensive over time. It's important to work with a qualified mortgage broker to determine the best financing option for your unique situation. Let’s connect today and figure out which option will be best for you!
