With neighboring Mississauga to the West and within a short drive to Pearson International Airport, the Municipality of Brampton is ideally located for those homeowners that require a neighborhood feel with convenient transportation links. The area has grown in size in recent years to 593,638,000 as of the most recent population census recorded in 2016.
Providing ample local amenities, access to many residential neighborhoods to choose from and within an easy commute for those that work in downtown Toronto, Brampton continues to hold appeal for potential homeowners.
With a strong industrial hub and falling under the religion of Peel, Brampton is situated north of downtown Toronto. Retaining an urban presence with all the comforts of suburban living, current residents and potential homebuyers can see the attractiveness of the area they choose to live in.
Housing numbers across Ontario continue to impress. Brampton is no exception. The GTA in particular has seen historically high average house prices, coupled with a sharp increase in the number of housing sales throughout the region.
According to the July 2021 Brampton Housing Report, real estate statistics have continued to outperform many expectations throughout 2020 and into the second half of 2021. With property appreciation heading northwards and a frenzy of buyers wanting to tap into the robust real estate market, the average price of a single detached Brampton residential dwelling has skyrocketed to 1 Million. This increase represents a substantial 18.4% year-over-year price hike.
Housing numbers have encouraged some potential homebuyers to seek mortgage financing. While current Brampton homeowners may be also eager to benefit from newfound property appreciation. One way to make your equity work for you, just as you have worked hard to pay your mortgage, is the option of tapping into acquired home equity to take out a second mortgage.
Many refinancing options are available. Utilizing existing equity can represent a good option to free up money in your home to use for pressing short-term economic priorities.
What about those homeowners that may have poor credit? Although turning to a bank may not be an option if credit is damaged, in Ontario there are well-established and experienced private lenders (referred to as C Lenders in the mortgage sector) who will be able to negotiate different private mortgage loan options despite creditworthiness.
Mortgage Broker Store can help to negotiate second mortgage financing directly, depending on your unique financial objectives, and is also in the position of pointing you in the direction of an experienced private lender who will be able to negotiate the most favorable terms on a private secured mortgage loan.
What types of Mortgage Options are Open to the Brampton Homeowner/Borrower
In the mortgage industry, there are many lenders available to help negotiate secured first, second, or even third secured mortgage options. These lenders, however, have different criteria that must be met before approving mortgage financing for a Brampton homeowner.
Credit scores and household income are defining criteria for the majority of Ontario-based lenders and it is for this reason that lenders are classified under three broad categories based on overall income sources and creditworthiness:
- A Lenders- Banks represent this category of lenders. Mortgage approval can be quite rigorous. Applicants are routinely put through tough mortgage stress tests to determine mortgage eligibility. These mortgage stress rules were tightened on June 01, 2021, further increasing the difficulty in obtaining mortgage financing. Banks also prefer to use easy-to-calculate, substantial household income when approving mortgage loan parameters.
- B lenders- Credit unions and trust companies make up this category of lenders. While not quite as stringent as the banks when determining mortgage loan approval, these lenders still expect to see a credit score of at least 550 and above and prefer traditional, substantial yearly household income.
- C Lenders- For those that do have poor credit, there are private lending options available. These lenders make up the third category of lenders and are able to look beyond damaged credit by assessing other criteria. This criterion is largely determined by the appraised value of your home, the calculated Loan-to-Value (LTV), the degree of available equity, and any additional financial assets to help secure mortgage financing.
Generally, a private lender will not lend beyond 75% LTV which represents 75% of the current appraised value of your home. It is necessary to have more than 25% equity built in your home to be considered acceptable for a private lender to lend out private mortgage financing and additional financial assets would help to leverage mortgage financing if applicable.
A private lender will also be taking into consideration the location of your property when calculating the terms of a private mortgage. Generally, homes in larger urban locations will have a higher LTV as it is deemed less of a risk in the eyes of a prospective private lender.
How Do Private Loans Differ from Other Types of Secured Mortgage Loans?
Just as the degree of lending opportunities in Ontario is varied, so too are the types of second private mortgage loan options. Reasons vary as to why a homeowner will be looking to refinance. Regardless of the type of loan a Brampton homeowner chooses, private loans tend to be similar in several key respects:
- Private mortgage loans are structured as Short-term loans- Mortgage financing is designed to provide for immediate financial goals. Most private mortgage loan terms range from 6 months to 3 years.
- Private mortgage loans are negotiated quickly, and it remains a relatively straightforward loan process- Unlike their bank counterparts, private lenders are able to process mortgage finance options within 1 to 4 days on average as opposed to up to several weeks for bank loan processing times.
- Private Mortgage Lenders Can overlook poor credit by assessing other loan variables
Types of Private Mortgage Loans
Private lenders are able to offer a number of different mortgage loan types depending on both the goals and financial circumstances of the homeowner including:
- Home Renovation Loans
- Bridge Financing
- Negotiating new terms on your principal loan
- Home Equity Line of Credit (HELOC)
- Home Equity Loan
- Debt Consolidation Loans
- Reverse Mortgages (open to those 55 years of age and over)
What Rates and Fees Do Private Lenders Charge?
When lenders mitigate risk while structuring mortgage financing, creditworthiness is assessed heavily. Private mortgage loans are negotiated for those with poor credit and are considered inherently a higher-risk loan, therefore rates may be slightly higher than the banks are able to charge.
Generally, private lenders will be charging between 7% and 12% and any associated fees will typically range from 3% to 6% of the total cost of the private mortgage loan negotiated.
Mortgage Broker Store Can Direct You in Your Search for Private Mortgage Financing
Mortgage Broker Store can help connect you to an appropriate private lender to meet your mortgage needs. We are also in the position to lend out private mortgage financing based on your overall financial picture. Mortgage Broker Store understands the concerns of the Ontario homeowner.
We are continually striving towards finding the best match when looking at your particular mortgage and financing needs with access to a wide network of private lending options throughout the Brampton area and the Province.