When you finally decide it’s time to buy a home in Toronto, one of the important considerations that you must factor in when making decisions is where to get your mortgage financing. In most cases, homebuyers are torn between working with conventional lenders such as banks and working with a private mortgage lender like Mortgage Clinic. Each of the two options has its pros and cons and it’s only by understanding each of them that you can be in a better position to make the right decision.
In this guide, we shall look at the difference between private mortgage lenders and banks.
Who are private mortgage lenders?
Private mortgage lenders are firms or individual lenders who give short-term mortgage financing to prospective homebuyers and homeowners. For borrowers who can’t meet the stringent qualification criteria for mortgage application by traditional lenders such as banks, private mortgage lenders provide a great alternative as they are more flexible.
Private mortgage lenders are more interested in the value of your collateral property than your credit score. They also don’t demand too much paperwork thus, making the application and approval process easy and faster.
Pros of private mortgage lenders
Private mortgage lenders in Toronto like Mortgage Clinic are ideal for short-term mortgage financing as they are more personalized and interest-only.
Private mortgage lenders have an easy and faster mortgage application and approval process. They peg their financing decision based on the value of your property rather than your credit score rating.
Private mortgage lenders offer customized mortgage financing solutions that are unique to the needs of every borrower and they are more diverse and flexible compared to traditional mortgage lenders like banks.
Private lenders are experts in mortgage financing and they give borrowers the necessary training and professional advice when processing their mortgage in a more personalized way than traditional banks.
Who are traditional bank mortgage lenders?
Initially, banks were only mortgage lenders before other alternative mortgage financing lenders emerged. A traditional bank mortgage lender will require you to create a personal bank account with the bank before you can apply for a mortgage.
As a borrower, it’s advisable to work with a traditional lender like a bank if you require long-term financing. However, bear in mind that you will be required to pay both the principal and the mortgage interest.
Cons of traditional bank mortgage lenders
Conventional mortgage lenders such as banks have a detailed mortgage application process which makes the whole mortgage application and approval process cumbersome.
They have a much more rigorous application and approval process such as reviewing borrowers’ credit score ratings thus, making them hard to access especially for a large segment of borrowers with bad credit ratings.
Fewer mortgage loan options as banks only promote their in-house mortgage products. On the other hand, when you work with private mortgage lenders in Toronto like Mortgage Clinic, you will have access to a wide range of mortgage loan options from different lenders that you can choose from.
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