A short term secured loan is also known as a private mortgage. It usually runs for about a year to three years. With a mortgage approval, the borrower is not required to pay back the principle amount. The monthly repayments made include the interest-only and the principle is recovered at the end of the term. This gap is used by the Private lenders to their advantage. The private brokers look at more than just the credit history of the borrower before lending money. As there is no uniform interest rate, it is always best to reach out to a Certified Mortgage Broker. Having a mortgage broker by your side can make the process easier. They will work to find you the best possible deal. Taking a mortgage is a great idea when you need fast financing. It takes about two to seven days for the mortgage to be approved by the private lender. Following are some tips that can help to increase your chances of qualifying for a private mortgage.
Be aware of your credit rating.
The reason why many people opt for a private mortgage, is that money lenders don’t look into the credit ratings of the borrower. That is not true. They are less concerned about your credit rating but will be checking them. The credit rating helps them to determine how much of a risk it is lending you money. The rating also helps to determine the interest rate. If you have a higher credit rating, then the interest rate would be lesser. Hence, it is essential to be aware of your credit rating.
Collect Funds for a Bigger Down Payment
When buying property, you have to make a down payment on it. The higher the amount of down payment, the lower your mortgage will be. With a lower mortgage, you will have to make lower repayments. With more equity in the property, there is a lesser risk for the lenders to give you a mortgage.
Pay off your already existing debts.
To decide how much money they should lend to you, the lenders also look at debt to income ratios. Before taking a personal mortgage it is highly suggested that you pay off as much of your short-term debt as possible.
Have a stable income
When you plan to invest in property it is essential to have a stable income. It is not the best time to resign or start a business of your own. Having a stable income will help as the lenders will want to know whether you would be able to make the repayments or not.
Have all your documentation in place
You will require proof of income, tax returns for two years and proof of the ability to make down payments and pay the closing amount. All these documents should be in place.
Prepare an exit plan.
The broker will help you to have an exit plan. But having one of your own will only help to build your case further.