Getting a Loan For Rent to Own Homes
Do you need 25,000 for your down payment? Many of our clients over the years spend years saving for their down payment but they can’t seem to earn fast enough for the downpayment since the cost of a home is growing faster than they can save. So, what do you do? There may be a way out using Peer-to-Per funding.
Let’s say you want to purchase a house valued at $600,000. If your combined family income is $125,000 or more, there is a possibility you can afford the house. Next, your credit should be north of 680 with a clean credit profile. Last, this is where most people have trouble, you will need a minimum of 5% or $30,000, plus closing cost saved, provided you qualify for a conventional mortgage.
To improve your mortgage qualification, you can potentially use Peer-to-Peer funding to get an additional $25,000 to help with your closing costs. Now, there are some restrictions with using loans for your down payment, you will have to get this clarified with your licensed mortgage broker. You will also need to make sure that this loan payment does not negatively affect your TDS Rations but your mortgage agent will know more about that.
So, what is a Peer to Peer Loan and how does it work?
Peer-to-peer lending—also referred to as P2P lending—is an alternative type of personal loan. It lets people who wouldn’t otherwise qualify for a traditional loan borrow from investors, rather than working with a traditional lender.
The purpose of peer-to-peer lending is to drop the financial institution as the middleman. Instead of using a bank, credit union or online lender, borrowers can get help from other people or businesses to fund their needs. If you’re exploring personal loan options, peer-to-peer marketplaces should be on your list if you:
- Have a short credit history (or no credit history)
- Have a fair credit score 580 to 669)
- Don’t qualify for a personal loan from traditional financial institutions
- Have a strong credit history and want to shop for lower rates than are available through traditional lenders
- Prefer a more human, community-based approach to financing
How Does Peer-to-Peer Lending Work?
- Peer-to-peer lending happens through an online marketplace. To obtain a peer-to-peer loan, a borrower completes an application similar to those required for traditional unsecured personal loans.
- If you’re approved by the marketplace, investors will have the opportunity to review your profile and evaluate whether you’re a good fit for their investment needs.
- After your loan is funded by investors, you’ll receive your money and a repayment schedule. Rather than making monthly payments to each individual investor, you’ll make a single payment through the marketplace.
Peer-to-Peer Loan Features
Peer-to-peer loans eliminate the financial institution as the middleman. If you want to borrow money but don’t qualify for a loan through a traditional bank, credit union or online lender, peer-to-peer lending matches you with individual lender investors—not banks.
Keep in mind you may still need to state your loan purpose on your application, and some restrictions—like paying for college or gambling—aren’t allowed. Pre-qualification doesn’t hurt your credit score.
Many peer-to-peer marketplaces have pre-qualifications available. This means you won’t get a hard credit check, causing your score to take a dip before you even get your money. If you’re eligible for a P2P loan and complete your application, you’ll get a hard inquiry. But you only need to go through with it after you’ve been pre-qualified and know you’re eligible for a loan.
Lower credit threshold is needed to qualify.
Many financial institutions require good or excellent credit scores for borrowers to qualify. If you don’t have great credit, peer-to-peer lending is a better option than other types of loans with hefty interest rates and fees. Many marketplaces are open to borrowers who have a short credit history and those with higher debt-to-income (DTI) ratios.
Helps build credit. Like personal loans from banks and other financial institutions, on-time payments to your peer-to-peer loan will help boost your credit score. Most marketplaces report to credit bureaus, which is good for your credit score and history.
Peer-to-Peer Loans vs. Conventional Loans
Peer-to-peer loans have some similarities to conventional loans, but how you qualify and repay your loan might be a little different.
Recently we have reviewed one of Canada’s Peer-to-Peer lending platforms goPeer which is considered Canada’s first consumer peer to peer lending platform which connects creditworthy Canadians looking for a loan with everyday Canadians looking to invest.
We are a 100% Canadian, Toronto-based organization that seeks to improve the financial opportunities to everyday Canadians.
We understand that sometimes unexpected expenses may arise, and banks are just not fast enough to deliver. We’re committed to the financial health of our members and strive to improve the Canadian lending market by offering swift, affordable loans.
In Canada, lending to individuals profit only the big guys – large banks and financial institutions. We want to modernize this archaic system and make these investments available to everyday Canadian investors.
The loans offered through goPeer offer an attractive yield, have a low correlation to other asset classes, and most importantly they are accessible to everyone – not just the big guys. By using goPeer you contribute to shifting the balance of power from the large financial institutions to individual, everyday Canadians.
How goPeer works
Easy and convenient online application
Apply online for a peer to peer loan from the comfort of your home. Rest assured, our platform is fully secured. We have dedicated tremendous resources to utilize state-of-the-art security protocols with advanced end-to-end data encryption.
Get a response within 24 hrs on your loan application. Loan offers will be sent directly to your goPeer dashboard. Fast and convenient.
Get your money fast
Select a loan offer that’s right for you and the funds will be deposited into your bank account via direct deposit. Investors will have the opportunity to fund your loan, which is done anonymous.
Committed to full transparency
goPeer charges borrowers with one single origination fee, the amount of which is dependent on how much you would like to borrow. There are no early repayment fees or hidden costs for taking out a peer to peer loan on goPeer.