Weighing the Pros and Cons of Private Mortgages in Hamilton

Choosing to get a private mortgage on your Hamilton home is a big choice, and should be done thoughtfully. When considering any large financial investment, it is important to weigh the pros and cons. Private mortgages are a fantastic choice for many people, but can also be irresponsible for some.


  1. Disregard for credit score – Unlike mortgages that come from a bank, a private mortgage lender will very rarely limit your mortgage loan depending on your credit score. This can be a pivotal choice for many people seeking a mortgage, as a poor financial past can ruin a better financial future. Having a private mortgage can be the first step many people take to a stronger credit score, and can be the jumpstart people need.
  2. Investors Welcome – Private mortgages offer much more flexibility with timelines than traditional mortgages do, which can be a great benefit for investors of any kind. Many banks will not offer promising mortgage options for investors looking to buy a house needing multiple renovations. Run-down housing has a low property value, and is typically found in neighbourhoods in serious need of gentrification; this means that banks view their money lending as a risk and will attempt to limit it. Private mortgages on the other hand do not penalize investors for purchasing a low quality home, and in turn are their first choice.
  3. Flippers Wanted – Similar to investors desiring private mortgages, people who choose to "flip” a house can have great success with a private mortgage. Banks heavily benefit from mortgage periods being very long; the longer the mortgage term, the more interest they make. Renovators who only intend to keep the house for a short amount of time before giving the loan back provide no significant financial gain for banks, and will have a much harder time negotiating a mortgage.


  1. Interest ­– The interest charges on private mortgages are typically higher than those in a traditional bank mortgage. This can be due to a variety of factors, but will cost you more in additional fees over a long term than that of a bank mortgage.
  2. Disregard for credit score – As noted, disregarding a person’s credit score can be a positive aspect to private mortgages, but it can also be a drawback. If someone has yet to learn from their poor past financial choices, being lent a large sum of money for a house they ultimately cannot afford can be a potential issue. Just because a lender is willing to give out a mortgage loan with interest does not necessarily mean they trust you can pay it back. Taking out a private mortgage and being financially irresponsible will worsen someone’s already bad credit score.
  3. Fear of Bankruptcy – The worries of bankruptcy are probably not on the mind of the borrower of the money, but should be considered in regards to the lender. If the lending company goes bankrupt or closes for any number of reasons, the mortgage does not simply disappear; rather, it gets sold to another lending company. This means that instead of dealing with one lending company you could deal with many, all with different rules and regulations.
Like all large financial decisions, weighing out the pros and cons of private mortgages is an important choice. When browsing private mortgages in Hamilton, use this short list of factors to help make the best choice for you.  


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