The journey towards owning your own home can be circuitous for some folks. Qualifying for a mortgage becomes almost an insurmountable task when we consider the hoops to jump through when dealing with some traditional lenders. So what is your best option if your bank says no?
Working with a mortgage broker has many advantages, perhaps most importantly is that they have a whole suite of lenders they work with, rather than just one. To find out about the process, we spoke with Mathieu McCaie, broker at Groupe hypothecaire Expert Mortgage Group Corp. He’s a 17 year veteran of the mortgage broker industry and with his experience was able to guide us through the process. By putting your application through with a broker, you have access to their entire network of lenders, which moves beyond traditional lenders, like banks, and credit unions, and incorporating what are called private lenders.
What are private lenders, and how do you work with them? A private lender is exactly as it sounds; a private lender is a company who lends money to those who may not be approved through conventional methods. By starting your lending application with a mortgage broker, you have access to their entire network. For many borrowers, this normally means dealing with a bank, or credit union. Occasionally though, a situation may not lend itself to the framework of a traditional mortgage lender.
While many may think that private lending is strictly for those with bad credit, this is not accurate. Traditional lenders operate under strict parameters in any lending situation. Oftentimes that means a client with a minor credit issue, or those who are business for self, or someone who owns multiple rental properties will not qualify with traditional lenders. For example, let say you run your own home renovations business and would like to purchase and flip a property. A traditional lender may turn you away due to your employment status, or because the property is not currently in the best of shape, whereas a private lender may look at this as a great opportunity. This is when your broker can speak to you about the benefits of using a private lender for short-term financing needs. Mathieu says that at this point, he recommends lenders with the most experience, and with ethics.
“Dealing with Graysbrook means you’re dealing with a phenomenal group, who are 100% ethical. Horror stories happen in private lending, but not with Graysbrook.”
– Mathieu McCaie, Groupe hypothecaire Expert Mortgage Group Corp.
The process of applying to a private lender is much less cumbersome than with a traditional lender, and your broker can help walk you through the process. Keep in mind that private lenders operate on a short-term basis. With each application that is brought to them, your mortgage broker will work on your behalf to determine an appropriate exit strategy. In the example above, once the renovation was completed, traditional lenders will be more comfortable financing the property. This will allow you to repay the private lender, and move on to the next project!