Do you need financial help but have trouble finding it? Do you need capital to cover some big expenses? Have your funding requests been rejected by banks and other financial institutions?
If you answered yes to at least one of the questions above, you need the help of a private creditor. The main advantage of the private creditor is the financing tailored to your needs and situation. This kind of loan will not only get you out of a financial stalemate, but will also allow you to improve your financial health.
The bridge loans explained
Although this term may be unknown to you, it is an excellent financial tool that many Canadians rely on. It is a tool offered by private creditors to Canadians who want to borrow money by guaranteeing their mortgage, for example. Also, those who can not get bank loans, this type of loan is a great way to improve their credit score.
How does it work?
The bridge loan, similar to the mortgage loan, is used for short-term financing and to improve its credit rating in order to have access to bank credits later. Of course, the financial situation of each varies, but generally, everyone who calls on the near relay lives the following experience:
Step one: Reject by a bank
The Bridge Loan is an excellent financial tool for people rejected by banks or financial institutions because of their poor financial health.
Step Two: Working with a Private Creditor
Following the bank rejection, you must turn to a private creditor. Private creditors are more tolerant of risk and therefore more inclined to work with people whose financial situation might be difficult. In short, private creditors can allocate a short-term loan that will allow you to repay your debts. With an approximate duration of 6 to 24 months, you will have plenty of time to rebuild your credit rating.
Step Three: Working with Type B Creditors (B-Lender)
Now that you have improved your credit rating by working with a private creditor, you can refinance your mortgage with a B-Lender. As a result, you will be entitled to significantly lower interest rates, which will save you a lot of money. The goal remains the same; pay your mortgage every month on time, improve your credit rating and get better credit from a financial institution.
Fourth step: Finally, work with a bank or a type A creditor (A-Lender)
The last step of a bridge loan is to refinance one’s loan obtained from a private creditor with that given by a bank. At this point your credit score will be improved enough to get you a bank loan.
Creditors Type A, Type B and Private Creditors
If we analyze the world of financial loans, the latter can be divided into three levels. Each step represents a type of creditor. The highest echelon is for type A creditor or banks. The middle echelon includes type B creditors and the lowest echelon, private creditors.
Creditors of type A
Banks and traditional financial institutions have the most stringent requirements in terms of credit approval. For people with bad credit, this is a challenge. In this case, the loan from a private creditor is a great alternative. Individuals with a poor credit rating can obtain a loan from a private creditor and thus improve their credit rating and then apply for bank credit at low interest rates.
Creditors type B
This type of creditors are in the middle of the spectrum, between banks and private creditors. Their interest rates are higher than those offered by banks but, at the same time, lower than the rates offered by private creditors. Their goal is to help you restore your financial health. An example of this type of creditor is Home Trust.
This type of creditors do not only look at your financial data, but analyze the situation as a whole. Private creditors like to work directly with debtors to find solutions to achieve their financial goals.
When should the bridge loan be used?
Bridge loans are useful in the following situations:
- When you have been rejected by a bank or other financial institution.
- When you are late on your mortgage payments and you have received a notice from your creditor.
- When you have received your tax slip but can not afford it.
- When you have misery with the many accumulated debts and want to consolidate them all under one debt.
- When you are part of the Consumer Proposal program and want to shorten your payment period.
- When you are interested in a mortgage loan tailored to your specific needs.
The bridge loan may be the financial solution you so badly needed. Complete the online application and we will call you back to see how you can achieve your financial goals.