Canadian banks are strictly controlled by the government, and strict regulations are a deterrent to many loan seekers. You can only get a bank loan with 600 credit score and that is too high for many people in the country. The solution is private lenders who are not so strictly regulated and specialize in servicing hard to place mortgage loans rejected by banks. If you have been turned down by banks, look to the private mortgage lenders in Georgina for help.
Mortgages From Private Lenders
Georgina private lenders prefer to give out mortgage loans as registered mortgages secured by the property. According to the Ontario Mortgage Act, a private lender can sell off the property in default if rates are not paid as in the loan agreement. A private lender will typically offer anything from $30,000 going up to be repaid in one year unless you request an extension. Second mortgages, loans to people with low income and other high-risk circumstances, attract higher interest rates and fees than bank loans. Private lenders in Georgina are individuals or companies that generate profits from real estate. They are particularly attracted to Ontario’s Cities and Towns owing to record high returns in recent times.
Reasons for Needing a Private Mortgage
While applying for a private lender mortgage, you will be asked to explain why you need the money. Don’t worry about rejection at this point because private lenders only seek this information to keep records. This differs greatly from banks, which often reject mortgage applications because they need the money. Private lenders understand that clients have diverse needs and accept the most reasonable answers. Some common uses for the money include:
- To pay for renovations or home repairs
- For living expenses after a layoff
- To stop a power of sale or foreclosure
- To pay off high-interest credit card debt
- To pay tuition fees for college or university
Private lenders specifically target people who could not be approved for traditional bank loans. Our private mortgage lenders in Georgina can lend to anyone who does not meet the banks’ approval criteria.
Rapid Financing from Private Mortgage Lenders
All the major banks in Ontario are required to approve mortgages after going through numerous steps to vet the client. This is impossible to speed up and very problematic for property sales that require rapid financing. People in such a predicament can turn to private lenders who can process your application much faster than banks. If so required, the mortgage can be processed in as little as one day. Our vast network of lenders can loan to real estate in other parts of the province.
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 Georgina Real Estate Market
All cities and towns in Ontario are the subjects of much debate because of the record high real estate prices in recent years. Many people looking to supplement their income in Georgina are turning into private real estate lenders. Ontario shares its border with the US and is a major economic hub. Many people also view Ontario as the best place to live in Canada. All these are the reasons why there continues to be an increase in the presence of private mortgage lenders in Georgina.
Looking for expert guidance in navigating the world of private mortgage lending in Ontario? Look no further than Mortgage Broker Store. Jonathan Alphonso and our team specialize in connecting clients with the perfect private lender tailored to their needs. Whether you’re seeking a first mortgage, second mortgage, or specialized mortgage loan, we’ve got you covered.