Archive for October 2015

These 5 Tips Will Make Private Mortgage Work For You!

If you are currently contemplating taking out a private mortgage for yourself or someone dear to you, there are five things that can help you make it good for you. These fundamental rules will enable you and your creditor not to crosshairs during its period and always ensure that you are well aware of what requirements are needed.

Getting the contract in writing

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No matter how trustworthy your creditor may be, you should formalize the arrangement even if it’s just one of those intra-family affairs. Whether you choose to do this in the form of a promissory note or other means, you should ensure that you register it together with the title deed with the relevant authorities.

It is critical that you secure the loan with the mortgage deed. By doing this, your lender will take ownership of your property in case some unforeseen tragedy befalls on you: loan default or death. Failure to do this can make the property revert to your other creditors. If this happens, you can risk jeopardizing your family if your creditor decides to legal action.

Setting an interest rate

While you might think that since it is private and should be interest-free, it is best if you are charged an interest. This is because as the borrower, you can be eligible for tax benefits while your lender can be able to beat the rising inflation.

Discussing contingencies

You should also ensure that you and your lender discuss all the pertinent matters conclusively before you receive the loan. This will help avoid conflicts and complications that may arise. You should discuss matters such as:

• What action should be taken when you miss a payment due to personal financial issue?

• What will you do to restructure the loan so as to prevent you from defaulting?

If you are not sure how to go about this, then you can always call on the services of a tax preparer or attorney whom you know. They can help iron out all necessary matters.

Keeping it civil

Relationships at times when doing business can result in conflicts which, if unchecked, can lead to huge problems. Thus, you should ensure that you seek the services of a mediator if necessary when things become sticky in your relationship with your lender. At times, seeking a financial gift arrangement as opposed to a family mortgage can help you avoid some of these complications. It can be unsightly to start arguing of unpaid dues at the family morning breakfast.

Getting credit

Often times, you may have a hard time getting your credit score reviewed with credit bureaus if you opt for a private mortgage. Thus, you should ensure that you send your private mortgage agreement and receipt of the regular payments you have been making to every bureau and request them to them to include this information on your credit history. If they agree, you should be prepared to pay a certain fee which is dependent on their discretion.

Seeking a private mortgage can often be a great way to finance your car or home purchase without having a broker’s pocket some of the funds. Because of this, you should ensure that you assess your interests since it normally affects the ongoing relationship you have with your lender.