Ontario is blessed with natural beauty and is an attractive place to live for Ontario residents and as such many Ontarians have chosen to buy property in the cities that dot the Province.
For those who call Guelph home, this southwestern Ontario city is rich in natural beauty and is situated within relatively easy commuting distance from larger urban centers. Just 100 km west of Downtown Toronto, and only 28 km east of the city of Kitchener, Guelph is nicknamed “The Royal City.” With a beautiful geographical backdrop and a top-rated University, Guelph is steadily attracting Ontario residents.
The real estate statistics reflect this reality. According to the latest housing market report for the city of Guelph, local property prices have jumped to unprecedented levels. Since the Spring of 2020, the average price of a single-dwelling property has hit a new high of $770,337 which represents an astonishing 34.1% increase from this time last year.
In the Guelph area, houses are flying off the market at higher speeds than last year, despite the ongoing pandemic which runs contrary to the expectation that many real estate professionals held as we entered the pandemic. In March 2020 it took an average of 12 days to sell a property in Guelph.
Fast forward to March 2021, and that number has shrunk to only 8 days from listing to closing on a given property in the Guelph housing market. The market is not slowing down any time soon. In the last quarter alone Guelph saw over a 13% increase in the average property value.
What if you Have Bad Credit?
Private Mortgage Loans are Widely Available for the Guelph Homeowner
Many Guelph residents are looking around and asking themselves if they can profit from such a housing boom. Contemplating taking out primary mortgages to buy into properties sure to appreciate quickly, potential homeowners face diverse lending options. Although many may not be aware that banks are only one of these options. In the mortgage industry lenders are classified into three broad categories:
- A Lenders– These lenders represent the banks in this country. Banks can offer historically low-interest rates on associated mortgages currently, however demand exemplary borrowing criteria. Banks will require near-perfect credit, coupled with easily proven yearly-based full-time income. Borrowers are often put through rigorous mortgage stress tests to be approved for mortgage financing.
- B Lenders- These lenders are mainly credit union and trust companies. Although the credit score needed to be approved for mortgage financing is not quite as stringent as their bank counterparts, substantial income must be demonstrated and credit scores must still not fall below 550 to be considered for a mortgage loan through these lenders.
- C Lenders– These lenders are well-established throughout the Province of Ontario and represent private lenders. Private lenders may lend out mortgage financing on an individual basis or as part of a group of private lenders. There are also Mortgage brokers that have specialized knowledge in the private lending process available for the Guelph homeowner/borrower. Private lenders in the Guelph area can lend out different types of second mortgage options as well as renegotiating the terms of your principal mortgage if you are already a homeowner.
Loan to Value (LTV)
A private lender will be assessing the Loan to Value (LTV) on your property which is based on a recent appraisal of your home. A private lender will lend up to 75% of the current value of your home. The existing equity in your property will also play a significant role in obtaining private mortgage financing. These lenders will prefer to see at least 25% existing equity in your home when determining mortgage amounts and terms.
Rates on all types of private mortgage loans are usually between 7% to 12% with any associated fees ranging from 3% to 6% of the loan’s total cost. These rates may be higher than the banks will charge but they provide a homeowner/borrower more flexibility, are negotiated faster than traditional mortgage financing and are structured as short-term loans (usually between 1 -3 years). Private mortgage loans provide the time to restore credit issues while providing the necessary funds to profit from the robust housing market or pay for immediate expenses.;
At Mortgage Broker Store we have access to a network of experienced private lenders and we will be able to connect you with a private lender in the Guelph area to discuss private loan options. Some types of private loan option include:
- Negotiating new terms on your principal loan– By taking out a private mortgage loan, it will enable a Guelph homeowner to meet some of the terms of their current primary mortgage which will ensure mortgage payments do not fall into arrears or pay off arrears if the mortgage is already past due.
- Second Mortgage- Using existing equity in your home and assessing the loan to value (LTV) a private lender will be able to negotiate an additional mortgage on your home freeing up funds to pay for immediate expenses or to maybe invest in a second property in the robust Guelph housing market.
- Home Equity Line of Credit (HELOC)– A line of credit can be set up using the equity in your home. This represents a revolving line of credit and can be used as needed.
- Home Equity Loan– Private lenders will determine the existing equity built in your home (requiring usually 25% equity) and calculate LTV ( private lenders will consider lending up to 75% LTV which is 75% of the appraised value of your home).
- Debt consolidation loans-To get over the debt burden of trying to pay down multiple debt payments, a private lender can negotiate a debt consolidation loan that will merge all the debts under one, easily managed monthly payment.
- Home renovation loans– Private mortgage loans can help to pay for any needed renovation to your home. By utilizing existing equity in your home, you can put these funds towards renovations and fixes that will further increase your home’s market value in an already robust Guelph housing market.
- Bridge financing -If you are requiring short-term financing for different reasons private bridge financing can help bridge the gap. Similar to most private loans, it is negotiated on a short-term basis. Most private loans are of term lengths between 1- 3 years.
Mortgage Broker Store Can Direct your Mortgage Search in the Guelph Area
At Mortgage Broker Store we are very experienced in all types of mortgage lending options available in the Guelph area with specialized knowledge when it comes to private mortgage lending. With access to a broad network of local private lenders in your area, we are more than happy to address any concerns you may have and help you achieve your mortgage goals by directing you to the right mortgage lender to negotiate the best terms to suit your unique economic circumstances.