Things You Should Know Before Choosing Between a Bank and Private Mortgage Lender

by Lalithaa


Mortgage lenders are institutions, groups, and businesses that lend money to consumers for their purchases, particularly real estate. This group of money lenders includes credit unions, banks, life insurance firms, trust corporations, and private businesses that lend money.

A private mortgage lender is a private person or a small business that offers specialised real estate loans for specific types of property. Borrowers who have trouble acquiring mortgage loans through traditional channels are typically helped by a private lender. 

Private loans are frequently small, bridge loans that are primarily secured by utilising real estate as collateral. Due to the volatility in the financial markets and the challenge of obtaining conventional loans, this specialist area of the mortgage lending sector has risen recently.

Why Consider Private Mortgage Financing?

A private mortgage lender may be able to provide you with more freedom than any other mortgage lending institution. In contrast to conventional institutionalized lenders, a private lender will place a high priority on home equity while making a judgment. Your equity position will be more significant than your salary and credit score. 

Therefore, having equity is crucial and having weak credit or a low salary is secondary. Consider a private mortgage if you are worried about these factors affecting your ability to obtain a mortgage. A private mortgage can be the best option if you need a flexible financing solution.

Banks are usually more difficult to deal with than private mortgage lenders because they have more stringent mortgage loan requirements and policies. Expect a bank to scrutinize your financial history, credit rating, and income sources. If you’re self-employed, you’ll have a hard time qualifying for a bank loan.

On the other hand, private mortgage lenders are less regulated, enabling them to offer more flexible terms to customers. You can easily get mortgage approval from a private lender. A private mortgage lender customises each loan according to the credit score and debt-to-income and loan-to-value ratio. 

Moreover, private lenders are more considerate in qualifying income. They can accept explanations about background flaws, giving more chances for people who have poor credit or are self-employed to get approved for a mortgage loan.  

Benefits of Private Mortgage Financing

There are many other reasons to think about applying in addition to flexibility, which is one of a private mortgage’s key benefits. For instance, interest-only payments may provide you with the partial relief you need.

You may be able to pay off other debts or get by during a job loss with a short-term infusion of cash into your monthly budget. Additional advantages that private mortgages can provide include the following:

  • presenting both short- and long-term choices
  • Possible interest-only repayment schedules
  • Minimal documentation requirements
  • a turnaround time of just one week (depending on the lender)

In comparison to going through your credit union or bank, private lenders can frequently get approval for a private mortgage more quickly. A private mortgage has flexible conditions that are intended to help your finances gain momentum. You might get the help or boost you need to get through if you’ve been having financial problems.

Can Private Mortgage help if you are Bankrupt?

You may have heard rumors that filing bankruptcy will “ruin your credit forever.” This is false, private lenders can assure you of that. Even if you’ve previously declared bankruptcy or submitted a consumer proposal, they can still assist you in obtaining financing. 

Your equity position is more significant than your credit history. Even better, you can utilize a private mortgage as a chance to repair your credit and raise your credit rating. There is no harm in applying with the assistance of a mortgage broker because a prior bankruptcy has no bearing on your chances with a private lender. 

When finding a mortgage loan, it pays to have a mortgage broker on your side. The best mortgage broker Melbourne or your area has to offer can help determine your best mortgage options. Your mortgage broker can represent you before the mortgage lender to increase your chances of getting loan approval, especially if your credit rating isn’t impressive or if you’re facing bankruptcy. 

In addition, highly experienced mortgage brokers help clients secure loans with the most competitive rates. They offer professional advice and implement a highly personalised client approach across all stages of the property acquisition process.


Facing financial issues or planning to apply for a mortgage? Why not give any private mortgage lender a try? If you’re worried that a prior bankruptcy will affect your ability to pay off your current mortgage, do not worry as there are many financing options available for you.

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