Banks in Canada are heavily regulated by the government and have many rules with regards to mortgage approvals. Private lenders in Richmond Hill deal with a lot of people who have been disapproved for bank mortgages. Private lenders are not affected by the same government rules that affect banking institutions. A major update to bank mortgage rules was put in place on Oct 17th, 2016. This new set of rules means that people have to qualify for highest interest rates on insured mortgages and overall more people will be turned down. Private lenders do not deal with mortgage insurance and are not impacted by these rules. Private lenders are a good option for people who have been turned down by banks.
The Richmond Hill area private lenders are people who invest into Richmond Hill real estate for profit. Lenders are attracted to Richmond Hill real estate due to the high price appreciation and high property values. Private lenders investing in Richmond Hill usually loan out $20,000 or more and for single year terms. The lender will set up the loan as a registered mortgage on the house. The registered mortgage lets the lender sell the property if the borrower fails to pay their fees.
When a Canadian bank goes through the mortgage application process, the first thing they look at is the applicant’s credit score. Private lenders are less concerned with credit scores and more concerned with the value of the property. A metric called Loan to Value (LTV) is the most important metric in private mortgage applications. In order to calculate LTV, you take the existing debts on the property and divide it by the selling price of the property. An example of an LTV value is a house with a selling price of $1,000,000 and $550,000 in debts will have an LTV of 55%. For residential properties in Richmond Hill a private lender will not invest beyond 85% LTV.
Part of the private mortgage application process is stating how the money is to be spent. There are many potential reasons for why a loan is needed. Answers we hear quite often include:
People who are turned away by banks are usually the type of clients that private lenders service. Richmond Hill’s private lenders specialise in hard to place mortgages that banks cannot deal with. By using a private lender mortgage you can also improve your credit score in the future.
Canadian banks are required to follow a long mortgage approval process. If you require the financing quickly, the banks are not able to speed up their processes. Many real estate transactions are sensitive to delays and may fall apart when financing is delayed. Many private lenders specialise in fast funding and are generally faster than banks. We are able to provide funds in a single day when required. The private lenders we deal with lend all across Ontario including Richmond Hill.
Richmond Hill is a town located immediately north of Toronto Richmond Hill is known for being an affluent part of the GTA with many large properties. Investors are able to loan large amounts in Richmond Hill due to the high average income and high property values. The town has a low unemployment rate and is home to many small businesses. The town is also a popular place to live for people working in Toronto due to its location and connected highways.