Short term mortgage financing and bridge loan

Do you currently have difficulty obtaining the financial assistance you need? Do you need to pay off a debt or cover an unexpected expense? Have you been rejected by your bank and other major financial institutions because of bad credit or other reasons? If you answered yes to any of the questions above, a private mortgage lender might be able to help you solve your financial problems. The best thing about working with a private mortgage lender is that they can offer you a custom short-term financing solution or a bridge loan. These products will not only help you manage impending problems but may also have a strong positive impact on your financial situation.

Relay loans explained

Although you may never have heard of a bridge loan before, it is actually a common financial tool and very useful for many Canadians with credit problems. It is a short-term financial solution provided by private lenders, to those looking to use the borrowing potential of their homes to help cover an expense. For customers who can not obtain similar financing from banks, this type of product also has the added benefit of improving their overall solvency. Most often, a bridge loan is the preferred choice of people who have been rejected by their banks.

How does it work?

A bridge loan financed by a private lender is similar to a typical mortgage, but it is intended to be used for a short-term solution to improve your credit and help you access interest-bearing loans in the future. Since everyone’s financial situation is unique if you are considering taking a loan to improve your finances, here’s what to expect:

Step 1: Rejection of a bank

Step 1: Rejection of a bank

A bridge loan is a great option for anyone who has been rejected by their bank because of credit problems, or other financial issues.

Step 2: Work with a private lender

Step 2: Work with a private lender

Because you have been rejected by a bank, you will now need to switch to something else and work with a private lender. Private lenders have less risk aversion than banks and are therefore more willing to work with people with credit constraints. This means they can offer you a short-term mortgage that you can use to cover your urgent financial needs. These mortgages usually last from 6 months to a year or two, during which time you will make all your payments in time to rebuild your credit.

Step 3: Work with a tier B lender

Now that you have improved your credit with a mortgage from a private lender, you can refinance this mortgage with a rank B lender. Usually, you will qualify for a significantly lower interest rate this way, so that you can save on financing costs. The goal here is the same: pay your mortgage on time each month, improve your credit and have access to a mortgage loan from a traditional bank or a tier A lender.

Step 4: Finally, work with a bank or a tier A lender

The last step of a bridge loan is to refinance the mortgage you had from a lender B or a private lender, with a bank or with an A lender instead. At this point, you should have sufficiently improved your credit to qualify for an even lower interest rate.

A lenders, B lenders and private lenders

A lenders, B lenders and private lenders

If we see the world of loans as a scale, there are 3 steps. Each level represents a different type of lenders. At the top are the A lenders or the banks, the middle echelon is for the B lenders and the last echelon is for the private lenders.

Lenders A / Banks

Lenders A / Banks

Banks or other large traditional financial institutions have stricter approval requirements that potential borrowers must meet. For people with low or low credit history, this presents a big challenge. This is where the bridge loan from a private mortgage lender becomes an extremely useful tool. Individuals with limited credit can obtain a bridging loan from either a lender B or a private lender in order to make their way up the ladder and possibly save on interest charges.

Lenders B

B lenders are stopping between banks and private lenders. Their rates are generally higher than banks, but still lower than those of private lenders. Like private lenders, their goal is to help those who have been rejected by banks and other lenders A. Examples include institutions such as Home Trust.

Private Lenders

 Private lenders

These are lenders who tend to see the full story, not just a credit score or other typical financial indicators when approving. Private lenders like to work with their borrowers to help create short-term solutions to help them achieve their financial goals.

When is a relay loan the right choice?

Bridging loans and short-term mortgage financing are great options for a variety of financial situations, including:

  • Rejection: If you have been rejected by other financial institutions.
  • Late Payments / Default Notice: If you are late on loan payments or have received a notice of default from your lender (for example, a 60-day notice or a 90-day notice).
  • Tax bill: If you have received a government income tax bill and do not have the money to cover it.
  • Debt consolidation: if you are currently struggling with debt repayment and thinking about consolidation
  • Consumer Proposals: If you make a consumer proposal and want to consider the possibility of shortening your payment period.
  • Mortgages: If You Need a Custom Mortgage Solution Due to Specific Debt Issues

Start today

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