When you are looking for a private mortgage, it is important to be aware of the most common terms used in this type of loan. This will help you understand what is being offered to you and make sure that you are getting the best loan outcome possible. In this blog post, we will explain the most common terms used in private mortgages so that you can be an informed borrower!
Private mortgage
A private mortgage loan is a loan that is obtained from a private lender such as Pacific 8. Unlike obtaining a loan from the banks, private lenders offer quick approvals and have a relatively straightforward process. The loans are provided to a variety of borrowers from business owners to investors.
Mortgage broker
A mortgage broker works with lenders to help borrowers find the best deals possible on their mortgages. They also educate borrowers about different types of financing options so that they can make informed decisions when it comes to taking out this type of loan!
Loan term
This refers to how long you will be paying off your home before being able to sell it again after making all required payments each month over this period (usually 25-30 years).
Interest rate
This is the percentage of your loan amount that you will be paying in interest each year. It is important to compare different interest rates when shopping around for a private mortgage, as they can vary significantly from lender to lender!
First registered mortgage
When an individual borrows for the security granted over real estate, such as for commercial, industrial or rural land, they receive money for a first registered mortgage. This is the mortgage that takes priority over any other mortgages or loans that may be taken out against the property in the future. Factors such as the borrowers’ credit history and income are considered when issuing this type of loan.
Second registered mortgage
A second registered mortgage is a loan that is taken out after the first registered mortgage has been put in place. It is a mortgage that is charged whilst an original mortgage is still in effect.
Short-term loans
Short-term loans are loans that need to be repaid within one year or less. These types of loans can be used for a variety of purposes, such as purchasing an asset whilst you sell your current property.
Caveat loans
A caveat loan is a type of short-term loan that allows the borrower to take out a loan against the equity they have in their property. This type of loan is normally used for working capital and often involves a higher interest rate due to the higher risks involved with lending this kind of loan. Risks with this type of loan include that a caveat loan does not have the same enforcement rights as a registered loan.
Equity loan
An equity loan is a loan that is taken out against the value of a property. It essentially enables a person to borrow against the equity of their home. This type of loan can be used for a variety of purposes, such as investing in shares, home renovations or paying off debt.
Unregistered mortgage
This type of mortgage is usually taken out by borrowers who do not have good credit or who are unable to get a traditional mortgage from a bank. Whilst an unregistered mortgage can provide security for a loan for the borrowers, it doesn’t always mean the same for the lenders. Hence, lenders might lodge a caveat loan on the security property to protect their interests.
To Find Out More Get In Touch With Pacific 8
So there you have it! The most common terms used in private mortgages explained. By understanding these terms, you will be able to make informed decisions when it comes to taking out this type of loan. For more information, or if you have any questions, please contact the team at Pacific 8 today!
