If you’re looking to use your home to borrow money – be it for debt consolidation, home improvements, purchasing a second property, or other investments – applying with a lender is a necessary step. However, with conventional banks rejecting a large proportion of applications, you might find yourself in a difficult situation. Private mortgage lenders cater to people who have been declined by banks. These non-institutional financiers offer a viable alternative, focusing more on your property’s worth rather than your credit score or income. So, if you’re in Aurora and finding the mortgage landscape challenging, turning to a private lender could be your key to securing a loan.
Aurora’s Real Estate Market
When it comes to choosing a great place to live, Aurora can’t be overlooked. Situated in the Greater Toronto Area within the beautiful Oak Ridges Moraine, Aurora offers residents a blend of natural beauty, open space and affordability that comes with small-town living, and the economic opportunities of living in the Greater Toronto Area.
The city offers a diverse array of new and historic homes, which suits a wide variety of styles and tastes. Some of the most sought-after neighbourhoods in Aurora like Aurora Estates, Hills of St Andrew and the Aurora Highlands are known for their luxury houses and townhomes, while Aurora Village located downtown features many Victorian-style homes. A GO train connects Aurora to the heart of Toronto, making it easy to commute between the two cities.
The housing sector in Aurora has reflected the desirability of the area. Just as in other cities across the Province, housing prices have dramatically increased through the height of the pandemic in 2020 and into the early 2020s.
In April 2018, the average price of a home in Aurora was $841,200. As of April 2023 homes in the city have nearly doubled in value, increasing to an average price of $1,418,700, nearly double the price they were only 5 years ago.
If you are a current homeowner in Aurora, your home is an asset that has significantly grown in value over the past few years. As Aurora continues to grow, the value of homes in the region is likely to continue to increase. As homes grow in value, so too does your home equity. Home equity refers to the portion of your property that you truly own. It’s calculated by taking the current market value of your property and subtracting any outstanding mortgage balance. As you pay down your mortgage or if your home’s value increases, your equity grows.
If you own a home in Aurora, you probably have a lot more home equity than you think. This equity can be a valuable resource, as it can be used as collateral for loans, allowing homeowners to access funds without selling their home. However, accessing this equity can be tricky if they are not interested in selling their home.
What is the solution? It may be advisable to seek the help of an established and experienced private lender in Aurora. Private lenders will be able to offer a range of first and second-mortgage options to homeowners in the area, even if they have poor credit, higher-than-average levels of debt, or limited household income. For homeowners who can’t get approved by their bank, this could be the only way they can access the funds they need.
Different Types of Lenders In Aurora
If you want to tap into your home equity, or get a loan of any kind, you need to know what types of lenders you can work with. Many are not aware that banks are not their only option when looking for financing. There are other lending options available. The mortgage industry classifies different types of lenders into three broad categories which include:
A lenders– Banks are the most common type of lender in this category. which require at least a credit score of at least 650 and substantial household income to qualify for most mortgages. Borrowers are also put through rigorous mortgage stress tests to qualify for a bank-provided mortgage.
B lenders- Trust Companies and Credit Unions which require at least credit scores of 550 and are also expecting substantial household incomes and additional financial assets to qualify for mortgage financing.
C lenders– Private lenders who can provide mortgage financing despite poor credit and non-traditional household income such as freelance, contract-based or self-employed.
How to Get a Private Loan in Aurora
For those Aurora homeowners with poor credit, seeking private mortgage loan financing may be the route to take. There are established private lenders available in the area to help facilitate private mortgage financing when homeowners have turned away from other lending options due to bad credit.
Unlike the banks that base mortgage loan applications on demonstrating strong credit and easy-to-calculate, significant household income, private lenders will base mortgage financing on an appraisal of your home. These lenders will base the amount of financing on:
- The current appraised value of your home
- The location of your home
- The current state of your property including any fix-ups or underlying issues
- The Loan-To-Value (LTV). This ratio compares the value of the loan with the value of the home. Private lenders will approve loans with an LTV up to 75%, meaning they will approve loans worth up to 75% of your home’s current value
- Home equity worth a minimum of $70,000
Like anything in life, being prepared and gathering any necessary documentation is invaluable when seeing private mortgage financing. Take the necessary steps to be well informed for a potential meeting with a lender.
- A list of additional assets that you may have besides your primary residence.
- Paperwork proving all sources of monthly income including investments income, contract income, self-employed income sources, and child/spousal support monthly income.
- A recent appraisal of your property
- 2 Years of NOAs if applicable
- The clarity in terms of what type of private mortgage financing you will most likely be needing.
Explore Your Private Mortgage Options in Aurora
It can be quite difficult finding private lenders in Aurora, as they usually don’t advertise to the public. One way you can do this is by going online and searching for terms like ‘private mortgages in Aurora’ or ‘private lenders near me’ and browsing through the different options. A much faster and more effective option is to speak with our team here at Mortgage Broker Store at (416) 499-2122 or fill out a form on this website.
We have been working with lenders in Ontario’s real estate industry for more than a decade. Throughout this time we have worked with and developed professional relationships with hundreds of real estate professionals and lenders across Ontario and in Aurora. We can leverage these relationships to find private lenders who can work with you.
We will also be able to negotiate private financing directly, depending on your specific financial objectives. Poor credit and non-traditional income need not be a barrier to obtaining a bridge loan or any other loan to help pay off any pressing monthly liabilities. Don’t hesitate to contact us at your convenience to discuss the best options to suit your unique financial needs.