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.
All these factors and others make it an excellent real estate choice. Understanding how your financial options work if you’re looking to buy in Kitchener is the first step. Explore private mortgage lenders in Kitchener.
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. What’s more, 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 provide an excellent choice. They can help homeowners who are overwhelmed by repair bills, facing foreclosure, power of sale and several other challenging situations.
Private Lender Mortgages
The 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 that have 25% equity available. For example, a home worth a market value of $1,000,000 and a mortgage of $750,000 would qualify with 25% equity.
The loan is registered as a mortgage. These are considered secured debts. That means the property can be sold if the borrower neglects payments.
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 on 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 is LTV 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 are facing a foreclosure or power of sale. The lender takes a legal right to sell a property under a power of sale. With the foreclosure, that same lender assumes the title to the home as well. 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 set a homeowner back as much as $25,000.
- A job loss or unforeseen medical emergency can cause a homeowner to undue financial hardship. These people can also benefit from a private mortgage loan.
In the end, there are a variety of different 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 from which they don’t vary. An application generally needs to have at least 2 year’s 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 will also want to see bank statements and assets.
The private mortgage route is much more direct and less involved. These alternative lenders prioritize a crucial metric known as the loan-to-value ratio (LTV) in their assessments. This metric compares the value of a loan with the value of a property.
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. Mortgages that don’t meet traditional lending institution requirements are one of our priorities. Our team includes private lenders, brokers, and licensed mortgage agents. Let us help you prepare for and get a personal loan that meets your requirements.