To find private money lenders in Canada that are more specialized than regular mortgage managers that you would find at most major Canadian banks (such as the Royal Bank of Canada (RBC) or Bank of Montreal (BMO) you will need a mortgage broker. Private money lenders in Canada have a much more flexible set of criteria than the major Canadian banks when accepting a home loan. They can loan as much as they want since it is their money. Most private money lenders in Canada go up to a maximum home equity values of 85%. I certain cases some Canadian money lenders have been known to go up to a 95% loan to value ratio. Throughout the rest of Canada the ratios can change depending on the local real estate market.
Private money lenders in Canada will also look at your income for the past few years; they are trying to determine if you have enough income to service the loan.They will want to know if you have any undeclared income such as rental income from a basement apartment or a part time job. You will be required to provide information regarding any present mortgages, lawyer or any other persons involved in the transaction.
With the information that you have provided, private money lenders for bad credit in conjunction with the mortgage broker will consider the various options that are available. One option could be a debt relief program. Your credit card lenders are asked to take a reduced payment of the principal owing in exchange for immediate payment.
In many cases private money lenders in Canada will only lend within a certain area such as the province of Ontario. Our mortgage brokers have lenders that will provide the mortgage money in every province across Canada.
Canadian Bank Criteria
The large Canadian banks have their own set of criteria and lending practices. In most cities and towns the banks do not want to exceed a loan to value ratio (LTV) of 75%. Therefore if you home is worth $400,000.00 the maximum you could get is $300,000.00. For rural farmland in Alberta the LTV would be around 50%. Banks also want the borrower to have a job that has a steady and predictable income. They look at your total debt service ratio (TDS). If the number exceeds 45%, they will probably not give you the money. To determine your TDS add up all you monthly expenses and then divide that number by your total monthly income. For example, $2,000.00 monthly expenses divided by $10,000.00 monthly income gives a TDS of 20%, which most banks love to see.
Canadian banks can give higher ratio loans, but choose to take a very conservative ratio to reduce their financial risk. Canadian money lenders will take a realistic view of your ability to repay the mortgage money. There is another very important reason why they do not like to take higher risk home loans. When a default happens the bank will be forced to throw people out of their home and then try and sell the house. Throwing people out of their homes through a “power of sale” or a “foreclosure” can bring negative publicity and the big Canadian banks are very sensitive to any negative publicity.
It does not matter whether your house is in Ontario or Alberta, banks do not lend to anyone who may default on their home mortgage. Just like that they have reduced their bad publicity, but a bank with good public relations who will not give you a loan does you no good. Your alternative is to find private money lenders in Canada who can provide the funds that you require for a mortgage, even if you have a low credit score our private money lenders in Canada can help you.