A private mortgage is an agreement between a private lender and a borrower that is completely legal and secured for the lender by property. This agreement requires the borrower to pay the lender regular installments, which then become regular income for the private investor. These lenders can charge more than banks or other lending institutions, but they are also less demanding of perfect credit or other guarantees, and base the loan on the security offered by the property against which such a mortgage is taken out.
Most private mortgage investors are people who have sold their own property, and allow them to make such sales even in slow markets, because of the ease of arranging finance for the buyer. The seller is assured of a fixed income, and in case of default the property can revert back to the original seller. There are also other investors who have chosen this way of getting better returns for the money that they have. Home buyers who are finding such difficulty to obtain the right mortgage, can opt for this method, but are better served if they have private mortage advisors, who specialize in this form of mortgages, and will be able to steer them in the right direction.
Private mortage advisors will be able to take care of the interest of both the borrower and the lender, after thoroughly understanding the objectives of both the lender and the borrower. They are trained professionals and will always offer unbiased opinions on the home, the seller and the buyer. They will in most cases, have their own infrastructure or support system, that allows them to vet the property being offered for sale, the credentials of the buyer and the reputation of the seller. Their experience in the field can ensure that clients are always offered the correct advise.
These advisors are people who have been in the real estate market for a long time, and are well aware of market conditions and interest rates of mortgages that are offered by most banks or institutions. They will also have their own panel of private investors who have the necessary finance available to lend out to people looking to buy homes. Once they have studied the situation of a home buyer, and gauge that there may be problems for conventional lenders, because of the particular situation of the buyer, they will steer them towards these private mortgage investors, so that a deal can be safely concluded. These private mortage advisors may also be in touch with real estate agents, who are looking to sell their client’s homes, and will be offer these people better terms, as long as they are comfortable with lending to people with doubtful credit, even though they are assured the security of the property itself.
Advisors have to be paid fees, and it is always better to factor this into any transaction, so that the final advantage of obtaining such advise is apparent. There are fewer formalities in obtaining private mortgages and this can be an advantage to both seller and buyer.