Many people in Canada turn away from banks owing to the strict government rules controlling them. People would rather work with private lenders who have more free rein to offer loans to people who could not meet banks’ strict loan approval criteria. Banks’ most important measure of credit worth is a credit score based on an individual’s credit habits. Banks cannot loan to people with a score below 600 points. Private mortgage lenders in Belleville specialize in hard-to-place mortgages that banks cannot service due to strict rules set by the authorities. If you have poor credit or were turned away by the banks, a private lender may be able to help.
Mortgages from Private Lenders in Belleville
Belleville private mortgage lenders loan out money as a registered mortgage secured against real estate. Under the Ontario Mortgage Act, the private lender will sell property in default to recoup if a borrower cannot pay agreed mortgage fees. Private lenders offer as little as $20,000 for one year, but you can choose otherwise. Second mortgages and other high-risk investments attract higher fees than bank loans as private lenders try to reduce the chances of losses. Most private lending companies generate profits from real estate, which explains their attraction to Belleville, which has notably high real estate appreciation rates.
Reasons for Needing a Private Loan
There are many reasons why people need loans from a private lending company. You will be asked to state your reason during the application process, but that will not be used to judge you. Banks often reject applications owing to unreasonable responses, but private lenders are more lenient. They understand that each customer has unique needs and strive to provide custom loans that are both useful and affordable to repay. Some popular responses include:
- For living expenses after losing a job
- To stop a power of sale or foreclosure
- To pay tuition fees for college or university
- To pay for home repairs or renovations
- To pay off high-interest credit card debts
People who didn’t meet the bank’s approval criteria should consult with private lenders who have products exclusively designed for them. Our private lender network can provide mortgages to anyone turned away by the banks.
Fast Financing from Private Lenders in Belleville
Major banks in Belleville must follow a strict, tedious loan approval process set out by the government. Banks’ slow process hinders property sales needing quick funds, posing a significant obstacle. We can approve a mortgage request in 24 hours, and completing the mortgage is 2 to 3 weeks on average. Our network of private mortgage lenders in Belleville also lends to other cities and towns in the province.
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%.
Information on Lenders in the Belleville Real Estate Market
Belleville is in the province of Ontario, which is on Canada’s border with the US. It is a major economic hub and many desire to live in Ontario. The real estate market has been in the news lately over high appreciation prices in the last few years.
It is undeniable that Toronto and its surrounding cities hold the record for the highest real estate prices in the entire province of Ontario. These promising prospects for the future are leading more and more people to private real estate lending to generate additional income.
Find a Mortgage Broker or Mortgage Agent Near Me
We have mortgage agents and mortgage brokers near you. You can call our agents directly; they can also drive to your home. Our mortgage agents can explain the various options that you have regarding a mortgage.
- Introduction
- Mortgages from Private Lenders in Belleville
- Reasons for Needing a Private Loan
- Fast Financing from Private Lenders in Belleville
- Criteria for Private Lender Mortgages
- Costs Involved in A Private Lender Mortgage
- Information on Lenders in the Belleville Real Estate Market
- Find a Mortgage Broker or Mortgage Agent Near Me