Are you based in Barrie, Ontario, looking to apply for a mortgage loan? Has the dream of owning a house or any other real estate investment come to a red flag with those reputed banks? Try private mortgage lending: this is when private options get into a place where conventional banks cannot meet specific high qualifications. In this article, we will discuss some of the advantages of dealing with private mortgage lenders in Barrie and provide you with the information you need to make an informed decision about your mortgage financing options.
Reasons for Needing a Private Lender Mortgage
There are several reasons a person in Barrie might need a private lender mortgage. Some of the most common reasons include:
- Poor credit: If a borrower has a low credit score or a history of credit issues, they may not qualify for a traditional mortgage from a bank or credit union. Private lenders often have more lenient credit requirements and may be more willing to approve a loan for a borrower with poor credit.
- Self-Employment: Self-employed individuals face challenges with traditional mortgages due to income history requirements, but private lenders offer flexibility.
- Quick financing: Private lenders typically approve and fund a loan much faster than traditional lenders, making them a good option for borrowers who need financing quickly.
- Power of Sale or Foreclosure: If a person is facing power of sale or foreclosure on their home, a private lender mortgage may be able to provide the financing needed to bring the mortgage current and save the home.
- Non-conventional properties: Private lenders are often more flexible about the types of properties they will finance, including non-conventional properties like multi-unit buildings, mixed-use properties, and commercial properties.
How to Refinance a Mortgage in Barrie
Refinancing a mortgage or getting a second mortgage with private mortgage lenders in Barrie can be a bit different from the process with traditional lenders. Here are some steps to help you navigate the process:
- Gather Your Documents: Provide financial documents such as income proof and proof of property ownership for a refinance or second mortgage with a private lender.
- Shop Around: Compare rates and terms from a few different private lenders to ensure you’re getting the best deal. Consider the interest rate and the fees associated with the loan.
- Review the Terms: Before signing any agreements, make sure you understand the terms of the loan, including the interest rate, repayment period, and any fees or penalties.
- Get a Property Appraisal: Private lenders may require a property appraisal to determine the value of the mortgaged property.
- Close the Loan: Once you’ve found a lender with terms that work for you, you’ll need to sign the loan documents and provide any required down payment or closing costs.
It is important to seek professional advice before deciding on a refinance or a second mortgage, as these financial products can significantly impact one’s long-term financial well-being.
Information on Lenders in the Barrie Real Estate Market
Barrie, Ontario, is centrally situated and lies on the shores of Kempenfelt Bay, part of Lake Simcoe in the province. It is part of the Greater Golden Horseshoe region and has a population of over 150,000 people.
With rising home sales and prices, Barrie’s real estate market has recently grown. The median home price in Barrie had increased by nearly 10% year-over-year, according to the Canadian Real Estate Association. This was likely due to robust population growth, low unemployment, and favourable interest rates.
Although experiencing the challenges mentioned above, there are still some pointers that entice private mortgage lenders to provide mortgages to Barrie. Housing demand fueled by its growing population supports long-term increases in sales and prices of homes alike. A strong local economy and a low unemployment rate show residents’ ability for reliable payments of their mortgage. Besides, the diversity in its economy-manufacturing, retail, health, and education-will ensure that residents have more stable job opportunities.
Property in the city involves single-family homes, townhouses, and condos, which play to a wide range of buyers and investors alike. Geographically, proximity to major cities, like Toronto, also makes Barrie attractive for real estate investment, thus luring private mortgage lenders to the region.
Approval Criteria for Private Lender Mortgages
In the case of private mortgage lending, the criteria for approval vary from one lender to another in Barrie, Ontario. However, there is a general guideline that a lender may expect from a borrower seeking a private mortgage loan.
- Credit Score: Private mortgage lenders typically have more lenient credit requirements than traditional banks. Most private lenders won’t reject an application due to a low credit score. In general, a credit score of 620 or higher is considered acceptable by most banks, but most private lenders can accept any score.
- Income and Employment: Private mortgage lenders seek income and proof of employment. They’re often more flexible than traditional banks, accepting various income sources.
- Property Type and Location: Private mortgage lenders have property type and location restrictions. Some only lend on residential or certain areas, preferring cities like Barrie.
- Down Payment: Private mortgage lenders may require a larger down payment than traditional banks. Typically, a down payment of at least 25% is required by most private mortgage lenders. While the down payment requirement is strict, most other issues banks prioritize can be overlooked.
- Loan-to-Value (LTV) Ratio: Private mortgage lenders may also have stricter requirements for LTV ratios than traditional banks. LTV ratio is all existing mortgages plus all proposed mortgages, divided by the appraisal value. For instance, if a property valued at $500,000 seeks a $350,000 loan, the resulting LTV ratio is 75%. Some private mortgage lenders may cap loan approvals at LTV ratios of 75% or lower, with varying degrees of flexibility.
Some private mortgage lenders may impose extra requirements or criteria for borrower approval beyond the standard prerequisites. Therefore, it’s important to research and compare different private mortgage lenders to find the one that best suits your needs.
Costs Involved in A Private Lender Mortgage
Private mortgage lenders are more expensive than any other type of mortgage lender. There are no standard costs, but most lenders try to offer rates and fees that are competitive with other lenders. Here are some costs to expect as of December 2024:
- Interest Rates: Typically between 8% and 12%
- Lender Fees: Usually between 2% and 4%
- Broker Fees: Set to match the lender fees, which are usually 2% to 4%
- Appraisal Fee: $500 + HST for single-family homes in Ontario. Larger or unconventional properties will cost more.
- Legal fees: These range from $1,000 to $3,000, depending on the mortgage request.
How LTV Affects Costs
The Loan-to-Value (LTV) ratio plays a big role in determining your costs. Simply put, the closer your mortgage is to the lender’s maximum allowable LTV (typically 75%), the higher your rates and fees. Lenders see higher LTVs as riskier, so they charge more to compensate. Calculate this ratio by taking all existing mortgages plus all proposed mortgages and dividing by the appraisal value.
Here’s an example of how costs can vary based on LTV:
| LTV (%) | Interest Rate (%) | Lender Fees (%) | Broker Fees (%) |
| 50% | 8% | 2% | 2% |
| 60% | 9% | 3% | 3% |
| 70% | 11% | 3.5% | 3.5% |
| 75% | 12% | 4% | 4% |
What You Need to Know About Fees
Your mortgage amount includes specific fees, such as lender, broker, and legal, which are included in your mortgage amount and count toward the LTV. If your request is already at 75% LTV before fees are added, you might exceed the limit and not get approved. Appraisal fees are typically not included in the LTV and are paid by the borrower directly after the inspection is performed.
A good mortgage broker will provide documents that clearly outline all costs related to the mortgage, and whether or not they are included in the mortgage amount. Reviewing the costs with your broker is always a good idea to make sure they fit your financial plan.
When applying for private mortgage lenders in Ontario, you must state why you need the money. Private lenders are usually lenient and will accept the most reasonable responses.
Some popular responses include:
- To pay off high-interest credit card debt
- To pay for home repairs or renovations
- To cover living expenses after a work layoff
- To stop a power of sale or foreclosure
- To pay tuition fees for college or university
In many cases, borrowers approach private lenders for mortgages and loans to help consolidate existing debt or prevent property loss through foreclosure or power of sale proceedings. Many people juggle multiple types of debt at once. For example, as noted above, you might have a mortgage and a significant amount of credit card debt or outstanding student loans. Since mortgage and student loans are owed to different collectors, you may have to keep track of multiple monthly debt payments. A mortgage from a private lender can be enough to pay off what remains on your mortgage and your student loans. Upon settling individual debts, you’ll have a monthly payment to your lender, simplifying your financial obligations. Many borrowers find this an easier way to manage debt.
People who cannot qualify for a low-interest rate loan at a bank are the kind of clients that private lenders seek out. Our private lender network can provide mortgages to people turned down by banks. Most private lenders will offer a rate between 8% to 12%.
Private Lender Mortgages in Barrie
Barrie private mortgage lenders can be utilized for people in urgent financial situations who happen to have bad credits, the self-employed, and individuals unable to offer high down payments.
Private mortgage lenders have become a significant source of assistance for borrowers in Barrie who want to either buy or refinance a property. According to the Canadian Real Estate Association, the average home price in Barrie was $842,615 in 2024, which is highly unaffordable for most borrowers. Private mortgage lenders can provide loans for those who may not have the 20% down payment that traditional banks require for uninsured mortgages.
Most private mortgage lenders will have easier terms and conditions than traditional banks; hence, they can be able to facilitate credit and bank approval without hassle in the shortest period.
Help With Getting a Private Mortgage Lender in Barrie
Many people turn to mortgage brokers when they need help getting a private mortgage. Mortgage Broker Store is a direct private lender and mortgage brokerage firm specializing in providing private mortgage loans for a wide range of borrowers. Its experienced team can help you find the right lender and loan product to meet your needs.
Private mortgage lenders access extensive networks, including Mortgage Investment Corporations and individual investors, ensuring favourable rates and terms. They provide diverse loan products, such as refinancing second mortgages and home equity loans, aiding borrowers in reaching financial goals.
- Introduction
- Reasons for Needing a Private Lender Mortgage
- How to Refinance a Mortgage in Barrie
- Information on Lenders in the Barrie Real Estate Market
- Approval Criteria for Private Lender Mortgages
- Costs Involved in A Private Lender Mortgage
- Private Lender Mortgages in Barrie
- Help With Getting a Private Mortgage Lender in Barrie