Traditional and alternative lenders offer many mortgage products, and each one is suitable for different borrowers with their own individual financial circumstances. Depending on your needs, there will be a loan type that is most appropriate for your requirements, such as:
Assumable mortgages Private mortgages Bridge financing Interest-only mortgages
Assumable Mortgages: Partnerships between Buyers and Sellers
An assumable mortgage is a relatively rare type of loan, because it requires the cooperation of both the homebuyer and the seller. When homeowners sell their homes, they can transfer their existing mortgage to the new buyer, as long as the buyer qualifies for the mortgage through regular channels, and the lending institution that holds the loan approves the transfer. Assumable mortgages are great options at times when interest rates are on the rise, or if the mortgage has a lower fixed rate than the current market rates.
Private Mortgages: Financing Available for All Borrowers
Private mortgages are an excellent alternative for buyers who have been turned down by banks and traditional lending institutions because of poor credit ratings or a lack of credit history. A private mortgage is a loan product that comes from a non-institutional investor that is not affiliated with the banks or organized lenders. Oftentimes, private mortgages are arranged with the help of independent brokers, and can come in many forms, including:
Mortgage refinancing First and second mortgages Lines of credit Bad credit financing
Bridging a Financing Time Gap
The idea behind bridge financing is to allow borrowers to bridge the financial gap between buying and selling properties. This type of financing can become necessary when there is a space between the closing dates for the home that was purchased and the one being sold, because you are still responsible for the mortgage payments on both properties.
While bridge financing often has higher interest rates and other charges associated with it, it will ensure you have enough funding to finance both properties at the same time, so your goals as a homeowner will not be interrupted.
Interest-Only Mortgages
Interest-only mortgages are available in the form of first and second mortgages, as well as lines of credit, which are the most common incarnation of interest-only loans. When you have an interest-only loan, the monthly payments only pay the interest that accrues on the loan, and do not pay down the loan principal.
Because the monthly payments are lower, this type of loan is very suitable for borrowers who are:
On a tight budget Self-employed On a fixed income or pension Commission-based workers Seasonal employees
At times when borrowers have more disposable income, they often take advantage of the extra money to pay down some of the principal.
For information on acquiring a mortgage in Toronto speak with a professional mortgage broker, at Canadian Mortgages Inc.
