Private lenders are can be individuals or corporations that invest in mortgages within a certain geographic areas. Most private lenders can lend between $20,000.00 and $300,000.00 and will invest in first and second mortgages. Private lenders can be an alternative if you have been turned down by any of the major Canadian financial institutions. All financial institutions have changing sets of criteria for providing loans to clients; most of these institutions do not want to exceed a loan to value ratio (LTV) of 75% on a first mortgage and they require you to have a good credit rating. In other words if you have a poor credit rating you may have a difficult time to get private loan.
Most people require a first mortgage, second mortgage or to refinance their existing mortgage at some time in their life. First mortgages are the most secure type of mortgage they have first priority of any proceeds on the sale of a property. Second mortgages are secured against the property but are second in priority upon sale of the property. If the proceeds of the sale of the property are not enough to cover the second mortgage then the private lender can lose money. Mortgage refinancing is common and people refinance to take advantage of lower interest rates or consolidate outstanding loans so get private loan right now.
Most people are not aware of their credit score and do not pay attention to their credit score until they are turned down for a small private loan. Private lenders consider your credit score to be one component of your entire financial history. Most private lenders consider the loan to value (LTV) ratio to be the most important factor in determining whether you can get private loan. If you would like to know your personal credit score go to the Equifax website and get a copy of your personal credit report, your credit score is available at no charge. Look at your report to confirm that there are no errors and to confirm that it has been properly updated.
Private lenders like to inspect the homes and properties that they are providing loans for; the inspection process could take anywhere from one to three hours. Private lenders are looking for any significant problems that could have an impact on the value of the property, leaking roofs, broken windows, broken drywall or water stains on the walls are signs that the house is poorly maintained. Homeowners should take some time to clean their home inside and outside; a fresh coat of paint on the walls can greatly improve the appearance of the house. If money from the loan is being used to renovate the home, show the private lender what repairs or improvements will be done and how the repairs will improve the property value to help get private loan.
Trying to find a private lender to fund your mortgage can be a difficult and stressful experience, but our mortgage brokers can provide you with the assistance you need. Our mortgage team can tell you in a short period of time if your small private loan will be approved and how long it will take for you to get the money from a private lender to get private loan.