When faced with sudden financial challenges, a second mortgage can help you access money fast by using the equity in your home without changing your primary mortgage. A private mortgage allows you to access cash when a bank may turn you down for reasons such as having a poor credit history or you are self employed. More Toronto residents are also relying on alternative forms of income, making it harder to get approval for mortgages and loans from traditional banks.
Types of Private Mortgage Lenders
Private mortgage lenders provide a short term secured loan that usually runs between one and three years. There is no requirement to pay back the principal amount, instead the monthly repayments cover the interest with the principal attached at the end of the term.
- Individuals who can lend out of personal funds with interest
- Syndicate or a group of investors who jointly lend out their money and provide funds on a case-by-case basis
- Mortgage Investment Company which lends out money from a pooled fund with 20 or more investors
Private Money Lenders vs Banks
Private money lenders are different from banks in many ways. Private lenders consider several factors when evaluating a potential loan.
Equity – Private lenders will evaluate the value of the property being used to secure the loan. This is done by looking at the Loan-to-Value ratio or (LTV). The LTV for a property is equal to all mortgages on a property divided by the appraisal value of the property. If you own a home worth $1,000,000 and get a new first mortgage for $750,000 then your LTV ratio is 75% (i.e., 750,000/1,000,000). Most banks and other A-Tier Lenders can loan up to 95% LTV provided that the borrower has a good income and credit score. Most non-bank lenders can lend up to 75% LTV but can overlook income and credit issues.
Income – It can be difficult to get a loan from a bank if you don’t have traditional employment. These days most people don’t work ‘9-to-5’ but still have the necessary funds to pay back a loan. A private money lender will look at your overall income based on the average income of your type of employment to determine your eligibility.
Why Would You Use A Private Mortgage Lender?
Private mortgage lenders allow you greater flexibility for investing in property or making improvements to your home. Banks often require a greater amount of time to approve a loan while private mortgage lenders can usually make approval decisions within a week. So why choose a private mortgage lender?
- You need money fast and don’t have time to go through a lengthy approval process.
- You have bad credit and a bank or conventional lending institution will not approve a loan.
- You only need the money for a short term such as a home repair or personal emergency.
- You are purchasing a non-traditional property that is not usually covered by a bank or other institutional lender.
- You want to consolidate your debt.
- To pay off high-interest credit card debt
- To cover living expenses after a work layoff
- To stop a power of sale or foreclosure
- To pay tuition fees for college or university
Fees Associated with a Private Mortgage Loan
The fees associated with a private mortgage can vary by lender. Most mortgage rates will run from 7 to 12% depending on the eligibility factors. The combined lender and broker fee will be 3% to 6% depending on the complexity of the mortgage request.
When budgeting for your private loan, it is important to also take into consideration other fees such as:
- Legal Fees
- Land Transfer Taxes
- Real Estate Fees
- Broker and Lending Fees
- Private Mortgage Insurance
Private First and Second Mortgages – A first mortgage puts a first lien position on the property that is secured by the mortgage. Private mortgages are ideal for people who want to borrow money for immediate expenses and not be saddled with a long-term loan. Most private mortgages range from 1 to 3 years. A second mortgage is offered in conjunction with a first mortgage and puts a second secured debt on the property. A second mortgage can be a great tool for consolidating debt, funding home renovations, or act as a bridge loan.
Home Equity Loans – A home equity loan is a kind of loan secured by a piece of real estate. These loans are usually given as registered mortgages on a property and approval is based on the equity in the property. Equity is the value of a home minus the debts on it. Home equity loans are different from bank loans, which are approved based on credit score. Our team of experts have years of experience providing home equity loans in Toronto.
Debt Consolidation Loans – Debt consolidation is the process of refinancing a person’s debt by using one large loan to pay off many small loans. Typically, is done to get a lower overall interest rate, to reduce other miscellaneous fees associated with the individual debts, and for the convenience of making a single payment instead of many payments.
Getting Private Mortgage Loans in Ontario
A private mortgage loan can help you achieve your financial goals quickly and without a lot of hassle.
Major banks in Ontario have extensive and time-consuming loan approval processes. If you need money fast, you may be left waiting. Private lenders can provide mortgage money much faster than banks can, oftentimes in as little as one day if necessary.
Private lenders use the LTV ratio to determine the existing market value of the home. For example, a house with a market value of $1,000,000 and $750,000 in existing mortgages will have an LTV of 75%. Most private money lenders in Ontario will not invest in residential properties with an LTV of greater than 75%. Use our LTV Calculator below more information.
Need Help Deciding if a Private Mortgage is Right For You?
We understand that the world of private lending can be confusing. We are experts in arranging mortgages in Ontario and can answer all your questions. Get some free advice with absolutely no costs or obligations.
A Loan-to-Value ratio for a property is equal to all mortgages on a property divided by the appraisal value of the property. If you own a home worth $1,000,000 and get a new first mortgage for $750,000 then your LTV ratio is 75% (i.e., 750,000/1,000,000)
Most banks and other A-Tier Lenders can loan up to 95% LTV provided that the borrower has a good income and credit score. Most non-bank lenders can lend up to 75% LTV but can overlook income and credit issues.
The lender will then look at income to determine eligibility and ensure repayment can be made. Finally a lender will look at your credit score to evaluate your ability to meet your financial obligations.
If the borrower defaults on their mortgage, forcing the lender to sell the home to recoup the costs, the primary mortgage lender is paid back first. The higher a property’s LTV, the less likely it is for the private lender to be able to recoup their losses if the borrower defaults.
Private mortgages are one of the best options for people who want money fast without the assistance of a bank. No matter what kind of credit history you have or the reason you need the money, we can provide the guidance and knowledge to help you secure the money you need at a rate you can afford.
We offer Private Lending services all across Canada, including:
Private Lenders in British Columbia
As we continue to battle the economic spinoffs from the Covid-19 pandemic, many British Columbia homeowners may have been left feeling the financial squeeze on personal finances. You may have also had a hit to your credit score (Beacon Score.) Despite the pandemic affecting personal finances, British Columbia continues to still be a robust real estate market. Running contrary to logic, British Columbia real estate is still hot property despite widespread lock downs across the Province during this year.
According to the British Columbia Real Estate Association, home prices across the province are up a whopping 58% since the same time last year. Buyers are quickly outstripping available inventory which is at a historic low. Foreclosures are still low at 0.16% or 1, 086 British Columbia properties in arrears. British Columbia house prices represent some of the highest average home prices in the country at $844,000.
You may have asked yourself how you will be able to benefit from the lucrative real estate market while you may have multiple debt payments. You may also be looking to access existing equity in your home to help cover immediate costs to increase the selling price of your current home. Maybe you have considered taking out a second mortgage on your property or would like to refinance your existing principal mortgage.
Mortgage Broker Store knows that it is an additional economic burden if your credit rating has been adversely affected for differing reasons during the pandemic. We have access to a network of British Columbia-based private mortgage lenders that can help you obtain different types of short-term private mortgage loans when the banks can not help you.
We can facilitate financing for different secured mortgage loans including home equity loans, Home Equity Lines of Credit (HELOC), second mortgages, or help you refinance your principal mortgages. If borrowing funds from a bank becomes an impossible endeavor due to credit problems, then there are private lenders available to help the British Columbian homeowner reach their financing goals. Don’t hesitate to contact us at your convenience so we can answer any questions or concerns you may have.
Private Lenders in Alberta
Despite an ongoing oil crises, increasing unemployment numbers and a Pandemic that rages on, the Alberta real estate sector is booming with a 38% increase in home sales from the same time last year, according recent statistics reported by the Alberta Real Estate Association. The average Alberta home price is up 8% from January 2020 at $422,000. Foreclosures in the Province stand at 0.50% which represents 2,941 properties that are currently in arrears.
Depending on where your property is located property prices continue to increase into 2021. What if your personal finances have been hit and you want to add curb appeal to your home, or access equity in your appreciating property. If you have been turned down by the major banks when applying for a mortgage loan private lending options are widely available for the Alberta homeowner. Private loans can represent different options including a second mortgage on your property, home renovation loans, home equity loans, bridge loans and even refinancing options for your primary mortgage.
Well established Alberta private lenders are widely available to help with negotiating second mortgages on your property, or helping you obtain a home equity loan even if your beacon score has been hit during the Provinces economic downturn.. An Alberta based private lender will lend up to 70% LTV which represents 70% of the appraised value of your home. Average Alberta private lending interest rates on second mortgages are currently 10.49% according to the Canadian Bankers Association.
Knowing where to find private lending options is key. At Mortgage Broker Store we have access to a network of Alberta-based private lenders that can help address your financial needs and concerns. We will be able to connect you with Alberta-based private lenders to obtain different types of private mortgage loans. With more options, less reliance on credit, and an understating of your overall financial goals, Mortgage Broker Store can help you reach your home financing goals.
Private Lenders in Manitoba
Covid-19 has harmed the Canadian economy and forced us all to adjust to the realities of the pandemic. However, various sectors have seemed to be immune to the economic impacts. The Manitoba real estate sector is no exception. Despite the ongoing pandemic Manitoba average house sales are up 24% from January 2020 with a 4.3% increase in the Provinces average house price at $304,150 according to the Manitoba Real Estate Association. Foreclosures remain consistently low at 0.38% which represents 478 properties that are currently in arrears.
Although the Manitoba real estate sector has remained relatively robust, there have been economic ripple effects felt on a personal level. Manitoba homeowners have seen temporary job losses, reduced hours and have had to make adjustments in monthly budgeting to continue to pay principal mortgage payments in addition to all other ongoing expenses. Manitoba homeowners may have also seen a negative impact on their overall credit score (Beacon Score) as credit may have been damaged. Many traditional lenders base their lending criteria primarily on creditworthiness and borrowers’ credit scores.
What options are open to the Manitoba homeowner if credit is an issue? Manitoba has widely available private lending opportunities when Manitoba homeowners are looking to secure mortgage loans. If you are looking to secure a second mortgage, private lenders will lend up to 75% of the appraised value of your house ( or 75% LTV). The interest rate on such a loan will be 10.49% at 75% LTV and 9.98% at 65% of the appraised value of your home.
Mortgage Broker Store understands that credit can become a problem at times. We have access to a network of private lenders that also understand that credit should not be a barrier to applying for a mortgage loan. Manitoba-based private lenders are well established and experienced. We will sit down with you to address your financing goals. Manitoba Private lenders will look to other criteria such as other existing assets, all sources of monthly income including investment income and sizable down payments to help approve you for secured mortgage loans. Don’t hesitate to contact us at your earliest convenience to discuss your private loan options.
Private Lenders in Saskatchewan
Saskatchewan is experiencing record high home sales despite the ongoing Covid- 19 pandemic. Compared to sales from this time last year, statistics released from the Saskatchewan Realtors Association show that Saskatchewan home sales have risen 58%. The average house price has also risen 1% increasing to $257,500 from $253,750 from January 2020. Foreclosures in the Province of Saskatchewan are currently at 0.84% which represents 1, 105 properties according to the Canadian Bankers Association.
Regardless of which Province you reside in, as a Canadian homeowner you will have ongoing concerns that need to be addressed when it comes to financing and keeping up your biggest asset- your home. Also your finances may have been impacted negatively due to the ongoing pandemic. You may have trouble covering mortgage payments and be facing imminent threat of foreclosure. If you have credit issues and a decrease in your credit score you may have been turned down by the major banks when looking to secure a mortgage loan.
There are options available to the Saskatchewan homeowner. Private lenders are available to help bridge the financing gap. If for example you want to take out a second mortgage on your property to consolidate multiple debt payments, Saskatchewan private lenders will loan up to 65% LTV which represents 65% of the appraised value of your home. Interest rates will be 10.95%. Private loans can include debt consolidation loans, second mortgage loans, home equity loans, Home Equity Lines of Credit (HELOC), bridge loans as well as primary mortgage refinancing.
Mortgage Broker Store can help you obtain private loans to address your ongoing needs. With access to a vast network of well established Saskatchewan private lenders, we can get you in contact with an experienced private lender to obtain a secure private mortgage loan. Don’t hesitate to contact us at your earliest convenience to sit down with a private lender who can address any questions and concerns you may have. Don’t let temporary credit issues stand in your way of achieving a mortgage loan to cover your financial goals.
Private Lenders in Quebec
In the Province of Quebec, there are currently 2,652 homes in which mortgage payments are in arrears. This represents 0.29% of the total number of Quebec homeowners. These numbers are fairly low. Coupled with these low numbers, due to ongoing investments in different areas of the Quebec economy such as the transportation sector, the Quebec economy remains healthy despite the ongoing Pandemic. The Quebec real estate sector also remains robust. Home sales are up 18% from this time last year and the average home price has also increased. Home sales are expected to increase into 2021 according to the Quebec Professional Association of Real Estate Brokers.
On a personal level, Quebec homeowners have faced lockdowns and even curfews to help curtail the Covid-19 pandemic which may have negatively affected the household finances of Quebec homeowners. If your credit score has dipped it may have been difficult to take advantage of the thriving Quebec housing sector. Applying for home renovation loans or second mortgages may have been very difficult through the big banks.
If you have been turned down by the banks and credit unions for a mortgage loan a Quebec private lender will be able to offer a private secured second mortgage for example, at up to 70% LTV which represents 70% of the appraised value of your home with interest rates near 10% of the total amount of the mortgage loan.
Private mortgage loans are offered based on broader criteria than the often narrow restrictions imposed by the big banks. Private lenders will look beyond credit scores and include any additional assets you may have, all sources of monthly income available, and will look at the appraised value of your property to determine mortgage loan eligibility.
Mortgage Broker Store has access to a vast network of private lenders who can sit down with you to address your financing goals and work with you to negotiate a private mortgage loan. Whether you are looking to renovate your property, take out a second mortgage to consolidate debt, or even look to refinance your primary mortgage loan, we can help you achieve your goals. Don’t hesitate to contact us at your earliest convenience so we can answer any questions or concerns you may have.
Private Lenders in Atlantic Canada
As a homeowner in New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador you are enjoying a sellers market, despite the ongoing Covid- 19 pandemic. Despite local lockdowns in all four Provinces the housing inventory has been cut by 50% due to out of Province buyers who are snapping up local property in record numbers. According to Atlantic Canada based realtors, homes are selling at asking price and even over asking price.
In Prince Edward Island housing sales increased by 24.5% over the last year and Newfoundland saw a 39.5% increase during this same time.This housing flurry has not been seen since the early 2000’s. Foreclosure rates also remain very low at 1, 486 of mortgages falling into arrears which represents 0.42% of Atlantic based home owners, according to the Canadian Bankers Association.
Despite Province-wide housing price escalation and home sales throughout Atlantic Canada the expenses of maintaining your property and making monthly mortgage payments have continued to rise despite widespread job losses, reduced hours, and damaged credit. If you are looking to consolidate debt or maybe take out a second mortgage on your home it may be difficult to obtain financing through a bank if your credit score has dipped.
Despite having poor credit, there are other loan options available to provide financing. While a bank or credit union may require a higher credit score, there are private lending options available for Atlantic Canada based homeowners in your position. Private loan options include refinancing your principal mortgage, bridge loans, second mortgages, and home equity loans. Private lenders will look to broader criteria when determining private mortgage loan suitability including all sources of monthly income and additional assets as well as the appraised value of your home.
Mortgage Broker Store has access to a broad network of well established Atlantic Canadian based private lenders with lenders in all 4 Provinces that have a wealth of experience to help you obtain a private secured mortgage loan. We are available to address any concerns or queries you may have and get you on your way towards obtaining a private mortgage loan to cover your financial needs moving forward.
Private Lenders in Ontario
Ontario homeowners have a wide range of options when it comes to choosing a lender. Generally lenders will fall into 3 broad categories which include A lenders ( big banks), B lenders ( credit unions and trust companies) and C lenders ( private lenders). With increasingly stringent criteria imposed on Ontario homeowners when applying for mortgage loans by A lenders, many Ontario based borrowers turn to B lenders to apply for financing. If credit is in issue, however, these borrowers will not qualify for a mortgage loan. Don’t despair, private lenders will be able to negotiate loans based on other criteria including existing assets, all sources of income and the appraised value of your home.
Mortgage Broker Store is here to help Ontario homeowners with any mortgage loans that you may require, be it second mortgages, home equity loans, Home Renovations Lines of Credit (HELOC), bridge loans and consolidating loans. With access to a well established network of private lenders across the Province we will address your financing concerns and connect you with a private lender to negotiate mortgage loans to cover short term financial needs while you work to restore your credit.
Learn more about our Private Lenders in Ontario