The major banks in Canada have extremely rigid lending requirements, which means many people are turned down for mortgages. One popular solution for those turned down by banks is to contact a private lender in London. The private lenders in London have loose lending requirements than large financial institutions do. Banks, credit unions and other financial institutions are heavily regulated by the government, which lays down rules on the kind of people these institutions can lend to. Private lenders are not regulated by the government in the same way, and can lend to people who have been turned away by banks.
London’s private lenders are individuals or corporations who are looking to invest some of their money in London’s real estate market. London along with the rest of southern Ontario is seeing increases in home prices, although not as dramatically as Toronto and other GTA cities. Private lenders looking for a stable market with modest increases are attracted to London’s real estate. Some private mortgage loans can start from as little as $20,000.00. The term of the mortgage is usually 1 year or longer and the interest rate ranges from 5%-13%. The private mortgage company then goes through the same process a bank does and registers the loan against your property. This means that if the borrower fails to pay their mortgage fees, the lender can sell the property to reclaim their investment.
Mortgage approvals from London’s private lenders are not based on credit score, rather they are based on the property’s market value. This is different from the requirements of the banks, who place a high priority on income, credit score, and other miscellaneous factors. The key metric that private lenders use is called a Loan to Value Ratio (LTV). LTV is calculated by dividing all debts secured against the property, by the expected selling price of the property. Most private mortgage lenders in London, Ontario have a maximum loan to value ratio (LTV) of 85%.
When getting a private mortgage, you will need to give an explanation of why you need the money. If you were previously turned down by a bank, it would also help to explain the reason why the bank turned you down. Some examples of reasons people give for needing private mortgages are:
Our job is to get you the loans you require regardless of if you’ve been turned down in the past. A high credit score and income are not necessary for private lender mortgages. While setting up a new mortgage, we also create a plan to help improve your credit score in the future which allows you to qualify for lower interest rate loans.
Many of you have already spent hours and hours traveling to the banks and on phone conversations. You have filled out numerous forms and provided everything the banks asked for and the bank will still require more time to provide financing. Banks and other institutional lenders can take months to provide the money. Our network of lenders makes our company one of the fastest mortgage brokerages in Ontario. Compared to ordeal you have already gone through with the banks, a private mortgage is easy to acquire.
We are based in Ontario and a have a tremendous amount of knowledge regarding the local real estate market. We have arranged many private second mortgage for clients in the London area.
In recent years, the real estate market in London has been performing at a very high level. In 2016 home sales has surpassed the historical highs seen prior to the 2008 recession. The average home price in London increased by 5% in 2016 when compared to the previous year. Low inventory levels with high demand and stable price growth makes London, Ontario attractive to private investors. London has one of Ontario’s most affordable average home price which makes it attractive to new home buyers.