When dealing with banks, there are three types of financial transactions that can be difficult to acquire: banks are wary of securities lending, land mortgages & rural development mortgages because they believe they are riskier than they are. other types of home loans. Here is an overview of these three transactions and what makes banks reluctant to offer them:
Securities Lending (or Property Valuation Loans)
These types of loans are based on the value of a property owned and offered as collateral by an individual. Banks believe that these loans pose a high risk because, in the event that a customer is unable to pay and they must seize the property, it can be extremely difficult to resell if it is in a weak market, or if she finds herself in a rural area, or if she has no established structure. With this difficulty of reselling, the mistrust of the banks in front of the loans on titles is a little understandable.
Mortgages on Land / Properties
This type of mortgage is a loan facilitating the purchase of land or property. So, just as in the above securities loans, the emphasis, in this case, is on a property with no established structure. In the eyes of the bank, land that is undeveloped or undeveloped is considered less safe than a property with a structure or building: as such land requires a bank to pay more money for its development before it can recover. if the client is unable to make payments, banks tend to ask for a first payment or a larger down payment than with other types of mortgages – ensuring that risk is reduced at least.
Rural development mortgages
These mortgages involve the purchase of land typically located outside of urban centers and suburbs. Banks avoid these loans because they have one of the highest risk ratings of all types of mortgages. This is attributed to a number of factors: First, banks are limited in the amount they can claim as a down payment from the borrower and must, therefore, assume a larger share of the value of the loan. Then, if the customer ever fails in his payments, or if the mortgage is reversed, it can be very difficult to resell the property due to its rural location.
That’s why these types of mortgages often take into consideration the value of the economic activity you are looking to undertake with your new property. Banks want to know that if you find it impossible to make your payments, they will be able to put in place a different arrangement to recover their capital. They want this type of guarantee because they do not expect to be able to resell the property in a reasonable period of time or profitably.
These are the three main types of mortgage loans that banks avoid. Banks do not like risk, and, let’s face it, these three categories represent a significant risk because of the resale difficulty associated with their collateral.
What to do? If you want a mortgage of this kind, where can you turn? Do not be fooled by unreasonable “clauses” and “conditions” that can limit you. Do not be fooled by foolish service fees simply to have your request processed. Consider a private mortgage lender instead.
About private mortgage lenders
Private lenders are not banks. They have the freedom to decide on a case-by-case basis what level of risk they can afford. They are not subject to the same strict regulation as normal Canadian banks, and they do not require excessive payments if they do not deem it necessary. They have the freedom to choose what they are able to undertake based on several factors and not just your ability to pay. They will work with you to find an arrangement that will satisfy all parties involved.
If you have been refused by the banks and are looking for an installment loan, contact us. Tell us about your situation. We know how to believe in you and say “YES” when you only hear “no. “