Private mortgages, B lenders, MICs and second mortgages — how they work and when they make sense.
Borrowing $75,000 against your home costs roughly $3,713 over twelve months on a HELOC at an illustrative prime plus 0.50%, against about $11,993 on a one-year fixed second mortgage once fees are counted. Here is which one is cheaper for your file.
B lenders exist for self-employed, bruised-credit and high-ratio files a bank matrix cannot read. Here is who qualifies, what your file needs to look like, and what the premium costs in dollars on a $500,000 mortgage over a two-year term.
A private mortgage quoted at 10.99% does not cost 10.99%. On an illustrative $150,000 one-year second, a 2% lender fee and a 2% broker fee plus legal, appraisal and title charges push the all-in cost to 16.76% annualized. Here is the full breakdown and the exit plan that justifies it.
A lenders offer the lowest rates to borrowers who fit standard rules, B lenders accept more complex files for a premium, and private lenders lend on equity at the highest cost. Compare regulation, rates, fees and first-year cost, plus a plan to move up a tier.
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