Banks in Canada are under strict control by the government but the tight handle leads people away from banks and to private lenders. They are less regulated which is why many in St.Thomas specialise in servicing hard to place loans that were rejected by banks. To get a bank mortgage an individual must present a credit score that is above 600 points. This is very difficult for residents who have to seek alternative loan solutions. Private mortgage lenders in St. Thomas follow a unique set of rules, which allows them to serve people whose loan applications were rejected by banks. Their decision is not based on credit score but rather on equity presented as loan security.
Private lenders servicing the St. Thomas market prefer giving out loans as registered mortgages on a property. This way, they can sell off a property in default as the registered mortgage is recognised by the Ontario Mortgage Act. Private lenders offer as little as $20,000 that should be repaid in one year unless a client requests otherwise. Riskier mortgages attract higher fees than for bank loans as the stakes are higher for the private lender. Even with a registered mortgage, they may not be able to recoup if there were other lenders involved. The Ontario Mortgage Act requires that the first mortgage is paid first followed by others in chronological order until each mortgage holder has been compensated from the proceeds of the sale of a property in default. Private lenders are involved in real estate, which they profit from. They are particularly drawn to the St. Thomas market with high real estate appreciation rates.
If you apply for a private mortgage, the lender will focus on the home’s value and all debts in it. By dividing the debts by price of a property, they get the loan to value ratio, the most important metric to them. Most private mortgage lenders in St.Thomas can only loan to properties with 85% LTV or less as anything more indicates too little equity for them to leverage. The private lenders’ approval criteria are much different from banks that rely on credit score to inform lending decisions. Private lenders are interested in the property and therefore look only to homes with sufficient equity as worthy investments.
Private lenders need to know why you need the money but this does not factor in the final decision. They are very lenient and generally accept all reasonable response given for needing the loan. Some common answers from borrowers are:
Private lenders specifically target clients whose loan applications were rejected by the banks. These are individuals who own properties which they can leverage to gain money for various needs. Our network of private mortgage lenders in St. Thomas can loan to real estate in other parts of the province.
The major banks in Ontario must follow a rigorous process which is so time-consuming. It is impossible to speed it up and this process is a major deterrent for people who need money fast. Private lenders can provide money much faster and in emergencies, they can make funds available in as few as 24 hours, thanks to a brief, mortgage approval process. This is incredibly useful in times of a power of sale or foreclosure among other financial emergencies.
St. Thomas, Ontario is an important market for real estate investor looking to leverage the million-dollar industry. In recent years, property prices have risen with double margins and the promise of better things is a major attraction to private lenders. Many people in the area are turning to private real estate lending as a way of supplementing their individual income. Ontario is among the most desirable places to live and it is also Canada’s economic hub.