Are non-bank mortgages only for hardships?
Do you have a problem getting a mortgage in a bank? Then a non-bank mortgage could help you. They are provided by credit and savings cooperatives, which offer the same types of mortgages as banks. But what is the difference? In this article, you will read about the possibilities offered by non-bank mortgages and you will surely find a suitable solution to your problem.
Stop non-income non-bank mortgages
The new Consumer Credit Act prohibits the provision of mortgages to consumers without proof of income.
And it doesn’t matter if it concerns a bank or a credit cooperative. If they granted such a mortgage, they would run the risk that the client would not have to pay interest to them.
At first glance, it might seem that anyone who has a problem getting a mortgage from a bank will not get a non-bank mortgage today. But it’s not quite true.
Although credit cooperatives cannot provide non-bank mortgages without examining whether you have repayment, it is still their competitive advantage that they do not have such a strict client rating process as banks. So you can prove their creditworthiness by statement of account.
Simply put, you have to prove that you have to repay a non-bank mortgage. The team will assess what you pay for it individually.
Use of non-bank mortgages
Non-bank mortgages can be used for the same purposes as residential mortgages, American mortgages, or business mortgages.
The specialty compared to classic mortgages is the purpose for which you would hardly get a standard mortgage. It is mainly the payment of its own execution.
Non-bank mortgage on its own execution
The credit co-operative shall pay the execution on the day of signing the credit and pledge contract within the framework of the first drawing. The mortgage is not remunerated for this period, but for a maximum of 90 days.
After the deposit of the lien in favor of the cooperative, the rest of the loan is provided. For details, see How a Non-Bank Mortgage Resolves You.
Non-bank housing mortgages
Also, non-bank mortgages can be used as standard to purchase real estate for their own housing. And not only that, of course, other purposes are construction and reconstruction. Interesting are also the parameters of these mortgages:
- USD 200,000 – USD 30,000,000
- fixation 1 or 5 years
- maturity of 5 to 20 years.
You may be interested in the article Non-bank mortgage for an apartment on this topic.
Non-bank mortgages for entrepreneurs
To be fair, it should be noted that non-bank mortgages can also be used by start-ups. Just those who are without history, without the necessary turnovers and profits.
For them, a wide range of applications is offered, from operating purposes to the purchase of investment units. However, beware of these, I would highly recommend to carefully calculate their business plan. After all, it is a start with not a cheap loan.
All about these mortgages can be found in How non-bank mortgages work for entrepreneurs.
And the most important eventually
Non-bank mortgages are a non-standard type of mortgage. Therefore, it is more than necessary to think correctly when to use them, because you have to remember at least 3 things.
It is one of the highest. There is no problem to meet a fee for providing a mortgage for housing in the amount of 3% of the volume of the mortgage, which, for example, for a mortgage of 2,000,000 USD is 60,000 USD.
Of course there are products provided free of charge, but if you need a non-bank mortgage, I recommend having everything calculated from a mortgage specialist.
2. Maximum amount
These are not absolute amounts, they look tempting – see the paragraph above, I mean something else. Savings cooperatives provide mortgages on average at 57.5% of the value of the property.
So if you need USD 1,000,000, then you must have a suitable collateral with a minimum of $ 1,740,000.
There is also a big difference depending on what the purpose of the non-bank mortgage is. If it was a mortgage for housing, then we are talking about interest from 5.99% pa However, in the case of a non-purpose mortgage we find ourselves at 10.94% pa and more.