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What are Hard Money Lenders in Canada?
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Posted On :
Dec-29-2011
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Article Word Count :
477
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Hard money lenders in Canada go by many different names, angel lenders and private mortgage lenders being just two of them. Sometimes ‘angel lenders’ might be the most appropriate, as these lenders can provide short-term loans that are secured with a valuable piece of collateral, usually a home or a piece of land. While hard money lenders will offer a home loan just like other lenders and banks, they do have a few key differences that make this type of lending so attractive for so many borrowers
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Hard money lenders in Canada go by many different names, angel lenders and private mortgage lenders being just two of them. Sometimes ‘angel lenders’ might be the most appropriate, as these lenders can provide short-term loans that are secured with a valuable piece of collateral, usually a home or a piece of land. While hard money lenders will offer a home loan just like other lenders and banks, they do have a few key differences that make this type of lending so attractive for so many borrowers and investors.
Most hard money lenders in Canada will provide someone with a private mortgage for a much shorter term than a conventional mortgage. Whereas a “short-term” conventional mortgage might be for a term of 7 years, a private lender might structure their loans with only 6-month or 12-month terms. It is this shorter term structure that gives these types of loans the name “hard money loans.” And while many might think that this shorter term works against the homeowner or the investor, it’s in fact the opposite that’s true, and one of the things so many people like most about these types of loans.
Many “flippers,” people who like to buy fixer-uppers cheap and then sell them for a huge profit after doing the required work, often seek the help of a hard money lender rather than trying to secure a bank loan for their property. This is because the application and approval process for obtaining a hard money loan is much faster and smoother than applying for a conventional mortgage. This allows real estate investors to get into the market when they need to and work quickly with properties before turning them over for profit.
It is important to know that for this convenience and streamlined process, homeowners seeking a mortgage for a hard money lender will pay a higher interest rate than they would with a conventional mortgage. Interest rates are also typically higher on this type of loan because they are also often given to people who wouldn’t be able to obtain a mortgage otherwise, due to problems verifying their income or a bad credit score.
Hard money mortgages can either be used as a first mortgage or a second mortgage, although first mortgage loans are most often seen with hard money loans. When the hard money loan sits in the second mortgage position, this is known as a mezzanine loan.
Hard money lending is also very popular with commercial mortgages, where it can be difficult for a business owner to raise enough capital to cover the down payment. The terms “hard money lending” and “hard money loans” are most commonly seen in Canada and the United States, as these are the two countries who are most known to have and use hard money lenders.
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Article Source :
http://www.articleseen.com/Article_What are Hard Money Lenders in Canada?_126390.aspx
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Author Resource :
Bryan J is the author of this article. For more information about hard money lenders and hard money lending in canada please visit canadianmortgagesinc.ca
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Keywords :
hard money lending in Canada, hard money lenders,
Category :
Finance
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Mortgage
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