Many people do not really understand what a direct private lender does or how they may be able to help in your particular situation or where to find private lenders. Private lenders fill a void in equity lending created by financial institutions that are risk adverse. Private lenders will consider making loans to people with a bad credit rating or that are self employed, explain your particular situation including why you have a bad credit score. Private lenders invest their own funds and therefore set the criteria for each loan or mortgage and provide funds for second and third mortgages. The interest rate will be higher than a conventional mortgage but the higher interest rate is a reflection of the higher level of risk on these types of loans.
Major Canadian lending institutions have frowned on providing mortgages to self employed people, if you own your own business you are fully aware how difficult it is to get a loan from a bank or need to know where to find private lenders. Banks will ask for a large amount of paperwork and references, the usual result is that you do not qualify since your income is not verifiable. Private lenders understand that there are a large number of self employed people and they can afford to make monthly mortgage payments. Private lenders focus on the value of your home which is used as security, if there is enough equity in your home, private lenders will provide you with the money you require.
For most people who can tell you where to find private lenders the primary criteria for lending is the LTV ratio in your home. You can find out what your home’s LTV ratio is by dividing the amount that you owe on your home by the present market value of your home. An example could be a house in Oakville with a present market value of $500,000.00 and an outstanding first mortgage of $200,000.00, the LTV for this house is 40%. A lower LTV ratio means that a borrower can usually get a lower interest rate and may be able to borrow a larger amount of money. Most private lenders will not exceed a loan to value (LTV) of 85% on most homes or property, in some cases a direct private lender may be able to provide a mortgage with a LTV of up to 90%.
Appraisals are done for almost all transactions that involve a mortgage. The job of the appraiser is to provide an independent third party option on what the current market value of the house is. The appraiser inspects the house to determine its present condition. If the house is well maintained with recent upgrades such as new roof, new furnace and the house is in very good condition, the house may receive a higher market value when compared to other homes in the area. The appraiser who can tell you where to find private lenders compares the sale value of three other similar homes within the same geographic area. Factors such as size of the property, square footage of the house, finished basement, pool/sauna, number of bedrooms and bathrooms help determine a fair market value for the house being appraised.
Our mortgage agents can assist you in getting the funding that you need for your home. Our specialized network of private lenders has provided many loans to people in situations just like yours. For a free consultation on where to find private lenders you can call us today.