A private mortgage is the type of loan that you can get from business or individual instead of from a bank or any other lender institution. So, you can say that a private mortgage is not a traditional lender. When it comes to getting a loan for a home, buyers generally prefer private loans. So, if you are also planning to take a loan from a private mortgage lender, then you should know what are advantaged and disadvantages of private mortgages. It will definitely aid you in knowing whether the private lender is the right choice for you. So, let’s take a look at the pros and cons of private mortgages:
Pros of Private Mortgage Loans
- Easy to Get
If you are not able to get a traditional mortgage loan, then you should go for private mortgage loans as they are easy to get or qualify. Especially, if you are self-employed, then it really becomes hard for you to show income proof. That’s why the private lender is an ideal choice for self-employed to get an approval for a mortgage easy and quickly.
- Short Loan Approval Process
As compared to the traditional mortgage loan, the private mortgage loan process is short and that’s why if you want to get a mortgage in short period of time, then the private lender is a good option for you. The approval process takes a few weeks, and on another hand, traditional mortgage loan approval process takes 35-45 days.
Cons of Private Mortgage Loans
- Short Period of Payback
As everything has its two sides, and when it comes to the private mortgage lender, there are also cons. Private mortgage loans are not paid back over thirty years that happen in the traditional mortgage loan. Most private lenders want that loan should be repaid within a very short period of time. It is a very big disadvantage of private mortgages loan. Private lenders want a quick return and that can make a difficult for you in future.
- Interest Rates are High
Yes, there are high-interest rates when you go for private loans. Their interest rates are high because they don’t need perfect credit. Loans that private lenders provide are mostly secured by your personal property.
Hence, now you know both the cons and pros of private mortgage loans and it depends on you whether you should go for a private or traditional mortgage loan.