Banks are among the popular lenders in Guelph but many cannot access bank loans in the city. This is because Canadian banks are strictly regulated by the government. As such, one cannot get a bank loan if they have a credit score that is below 600 points. Private mortgage lenders in Guelph are the next resort as they specialise in servicing hard to place mortgages that were rejected by banks. Private lenders do not have to follow the same rules as banks meaning they can come to the rescue of people who did not qualify for banks loans.
Mortgages from Private Lenders in Guelph
Private mortgage lenders in Guelph prefer registered mortgages on a property as according to the Ontario Mortgage act, this helps them recoup once a client fails to pay as agreed. A loan from a private lender can be as little as $20,000, which is expected to be repaid in one year unless you request otherwise. An extended term is rather appealing because the monthly instalments are reduced to give you a chance of repaying without fail. Second mortgages and loans to people without income are very high-risk investments, which attract huge fees. Private lenders must extend mortgage-processing fees to the client as they do not wish to take on extra expenses and further risk their money. Such fees are used to pay the lender’s staff, real estate lawyers, appraisal and other staff in our mortgage team. Private lenders gain profits from real estate and this is why they are attracted to the vibrant Guelph market. The city is in Ontario, which boasts some of the highest increment in real estate prices.
Approval Criteria for Private Mortgages
All that private lenders want to see when assessing your loan application is the home’s equity. Banks must see your credit score but private lenders only need to see your home’s current value to compare with all the debts in it. They must use the values obtained to calculate an important metric best known as loan to value (LTV) ratio. This is achieved by dividing the total debts on a property by its appraised value. The result should be below 75% as this is the maximum to which a mortgage lender will loan. I f your home is worth $1,000,000 and you have debts of $600,000 against it, the LTV will be 60%, well below the requirement of a private mortgage lender in Guelph. Private lenders may not be worried about credit score but they are certainly wary of risk, thereby avoiding any properties with too much debt.
Reasons for Needing a Private Mortgage
You will be required to explain why you need the money but don’t worry as private lenders are quite lenient. People have several reasons why they might need a loan but the most common include:
- To pay for home repairs or upgrades
- To stop a power of sale or foreclosure
- To pay high-interest credit card debt
- For living expenses after being laid off work
- To pay tuition fees for university or college
Individuals who do not meet the high credit score requirements by banks only have private lenders to turn to. Our network of private mortgage lenders in Guelph is able to service loans that the banks reject.
Rapid Financing by Private Lenders
Bank loans are cheaper than the rest but you will need to be patient before the funds can be released to you. Canadian banks have to follow a long, tedious process before deciding on who to reject and who qualifies for a loan. There is no way of cutting corners no matter how urgent your need for the funds may be. The solution is a private lender who is not tied down by the same rules as banks. If there is a need for it, you can even have the funds in as few as 24 hours. This is ideal, especially where the borrower is facing a power of sale situation or needs to pay for emergency medical treatment.
Information on Private Lenders in the Guelph Real Estate Market
There is a notable increase in private real estate lenders in Guelph and for good reason. Guelph, or the Royal City, is located a hundred kilometres from Toronto and is in close proximity with Waterloo. The real estate market in Toronto and Ontario province as a whole is booming with a huge increase witnessed over the last couple of years. People in Guelph are turning to real estate lending to eke an extra income as the industry continues to grow.
Guelph Mortgage Brokers
We have mortgage brokers and mortgage agents near you. Our mortgage brokers are mobile and can come to your house to discuss your mortgage requirements.