Rick was laid off from a large area manufacturing company and his wife Sue carried the family on her minimum wage job. The Elora couple kept themselves afloat by racking up their credit cards for over 6 months and then and maxed all their credit out. When they couldn’t meet their monthly obligations they stopped paying their smaller cards. Then went to their bank but the bank couldn’t help them because their credit score was now too low.
We established that Rick and Sue had good credit history over the long term and we could see that they were responsible people. They simply had a current problem that required a short term solution, which is what private mortgages are designed for.
We arranged for a $38,000 second mortgage at 12 per cent for one year. The new money paid off all their credit cards (at 18 -29%). Our private lender met with them, saw the property and became comfortable with their ability to make the payments which are much less than their current credit card payments. The 2nd mortgage will give them time to re-establish good credit. With one year left in their first mortgage, we will be able to get them a new low rate first mortgage at that time, and payout the private lender.
If you have a problem, and (most importantly) you have sufficient equity in your home, a private (short term) mortgage may be the answer. Think of it as a band aid to stop the bleeding, put out the fire, and give you the time your need to recover from your troubles.
Life’s unexpected circumstances happen all the time. It is crucial that you find a reliable, reputable mortgage broker (we know one). It is always best to deal with someone locally who you know will act in your best interests.