Kitchener Waterloo is the common name for the Tri-Cities area, which includes Waterloo, Kitchener, Cambridge, and several rural townships. Kitchener is only an hour’s drive to bigger locations like Toronto, Hamilton, and London. The city’s economy enjoys a high-tech sector presence. Kitchener hosts the headquarters of companies such as Communitech and Google. Private mortgage lenders have become increasingly important in this dynamic region, offering alternative financing solutions for residents facing challenges in traditional lending markets.
These lenders provide crucial support to individuals and families who may struggle to secure conventional second mortgages, such as self-employed professionals, those with credit difficulties, or homeowners facing financial hardships like power of sale. Discover how private lenders can help homeowners in Kitchener by reading on.
Private Lender Mortgages
Private mortgage lenders in Kitchener are individuals or companies that work in a different capacity from provincially and federally regulated bodies like credit unions, trust companies, and banks.
These private lender loans are much easier to get approved for. Many lenders approve loans for properties with more than 25% equity available. Home equity is the value of the portion of a home that a homeowner actually owns that is paid off, calculated by subtracting the mortgage balance from the home’s market value.
The loan is registered as a mortgage. These are considered secured debts. That means the property can be sold if the borrower neglects payments.
Traditional Canadian Lending Institutions
Traditional Canadian lending institutions have strict requirements for mortgage approvals. For example, financial entities like banks apply stress tests before they approve you for a mortgage. Applicants need to prove they can afford mortgage payments at specific interest rates. These are often higher than the ones in a mortgage contract. Moreover, banks and other conventional institutions emphasized credit scores and income.
Private mortgage lenders in Kitchener have a different focus. They are less regulated and represent a great alternative for people turned down by banks. These private lenders focus more on equity and less on other metrics like the standard credit score.
For people who can’t get money through banks, private mortgage lenders in Kitchener are an excellent choice. They can help homeowners who are overwhelmed by repair bills, facing foreclosure, power of sale, or several other challenging situations.
Approval Criteria
Banks focus on credit scores. Private lenders, on the other hand, use the property’s value and the amount of debt currently secured.
Private lenders use the Loan-to-Value Ratio (LTV) when deciding whether to approve an application. The LTV is calculated by dividing the property’s secured debts by the selling price. Here’s an example: A condo’s value is $100,000 with a $40,000 mortgage. Using these numbers, the LTV is 40%. Private lenders in Kitchener will only approve applications with an LTV no greater than 75%.
As anticipated, various reasons drive people’s interest in this alternative financing option.
Reasons to Request a Private Mortgage
People apply for a private mortgage for different reasons. Following are a few of the more common ones:
- Some homeowners face foreclosure or power of sale. Under a power of sale, the lender takes a legal right to sell a property. With the foreclosure, that same lender also assumes the title to the home. A private mortgage can stop the process for either of these.
- Major home repairs can also cause financial hardship. For example, smoke and fire damage can cost a homeowner as much as $25,000.
- A job loss or unforeseen medical emergency can cause a homeowner undue financial hardship. However, these people can also benefit from a private mortgage loan.
In the end, there are various reasons why people choose private lenders. Many cannot be approved by their bank. Private lenders in Kitchener look after people who don’t qualify with traditional lending institutions.
Quick Private Mortgage Loans
Banks have a lengthy mortgage approval process that doesn’t vary. An application generally needs at least two years’ worth of tax returns. Proof of income is important. Submit pay stubs for employees and provide direct deposit numbers for self-employed individuals. Along with your credit report, lending institutions want to see bank statements and assets.
The private mortgage route is much more direct and less involved. In their assessments, these alternative lenders prioritize a crucial metric: the Loan-to-Value ratio (LTV), which compares a loan’s value with a property’s value.
Understanding the Kitchener real estate market is an important part of investing.
The Kitchener Real Estate Market
Kitchener, Ontario, is an excellent place to live and raise a family. According to Area Vibes, Kitchener’s cost of living is 15% lower than the average for the rest of the province. What’s more, real estate prices in the city are 36% lower than the averages for the rest of Ontario.
According to the rating site AreaVibes, Kitchener is 5% less expensive than the rest of the country on average. The median household income is $80,625, and the unemployment rate for Kitchener is 4%. That’s a full 45% lower than the Canadian average.
As of June 2024, the median home value in the area is $518,269. The town’s livability score of 87 unequivocally ranks better than 87% of all other areas on the website.
Mortgage Broker Store focuses on numerous mortgage-related products. One of our priorities is mortgages that don’t meet traditional lending institution requirements. Our team includes private lenders, brokers, and licensed mortgage agents. Let us help you prepare for and get a loan that meets your requirements.