Second and Add-on Mortgages
This is not a transaction one enters into lightly.
Understanding YOUR exit strategy is key for the private lender as they wish to be paid out in one year typically, two at a maximum. In my opinion your own understanding of the exist strategy is equally vital. What are we going to work together on the entire mortgage plan.
Like institutional mortgage loans, the private lender requires it to be secured by a second mortgage lien.
Interest rates are more aggressive due to the lender taking a higher statistical risk with regard to default and also in part due the very long and costly foreclosure process in Canada when default occurs.
Private second mortgage are useful for consolidating high-interest credit card debts by reducing your rates and payments and converting compound interest into simple interest.