If you’re a homeowner in Mississauga, you might find that traditional bank loans are not always suitable for your needs. These lenders offer more flexible loan options. This article will help you understand how to get a mortgage in Mississauga, what fees you might pay, and why a private lender might be your best choice.
The province of Ontario has many desirable locations to buy a property and call home. Mississauga is no exception. With the advantages of a suburban area and being directly accessible to big city amenities, Mississauga appeals to many.
What Is an Example of a Private Lender?
It’s helpful to look at an example to understand what a private lender does. Most alternative lenders will supply home mortgages when the property or house has more than 25% of the equity available.
So, an example works like this: If your home has been appraised at $1 million and you owe $750,000 on the mortgage, you could qualify through a private lender.
These private lenders primarily work with borrowers who take out mortgage loans on residential properties. The numbers are slightly different if you’re looking to get a commercial property mortgage. An example of a private mortgage lender could be a private investment company, wealth management firm, or individual investor who provides mortgage loans outside of traditional banking institutions.
Mississauga-Based Lenders
Homeowners may not be aware that banks are not the only avenues open to provide mortgage financing. The mortgage sector is made up of different classifications of lenders that are classified into three broad categories:
- A lenders– Banks are classified as A lenders in the mortgage industry. Banks require homeowners/borrowers to demonstrate high credit scores and easy-to-calculate monthly salaries. Borrowers are put through mortgage stress tests to determine mortgage eligibility. With current rising interest rates, things have changed again. For example, BNN Bloomberg reports that the purchasing power of an average mortgage holder has been cut by a further 8% through new stress tests.
- B lenders- Credit unions/trust companies are classified as B lenders. These lenders have slightly less stringent mortgage criteria. Borrowers must, however, present with credit scores of at least 550, and traditional income is preferred to contracting or freelance income.
- C lenders– Private lenders are classified as C lenders. Private lenders base mortgage financing on criteria beyond credit, salary amount, and type. The criteria are based on the appraised value of your home, your home’s location, the current condition of your property, and the degree of the existing equity in your home.
Why a Private Lender?
People also ask why they might need the services of a private lender. There are various reasons why you might need money from these experts.
Private mortgage lenders in Mississauga can help you stop the proceedings on a foreclosure or power of sale. Some people use a private mortgage to manage and consolidate their debt. For example, if you have a large amount of credit card debt, student loans, and other amounts, having only a single sum to pay each month makes it more manageable.
Overall, people who don’t qualify for low interest bank loans find more success with private lenders. Remember, these individuals and companies are not subject to the same strict regulations as banks.
Are you asking, “What is an example of a private lender?” If so, starting your search with good information is a great idea. These lenders can work independently as part of a Mortgage Syndicate, Mortgage Investment Corporation.
When applying for a private mortgage, ensure you provide all your financial statements. Read on to learn more about the rates that can be charged.
Private Lenders Assessments
Your financial situation and loan type will determine the mortgage rates and fees for the negotiated loan.
- The overall current appraised value of your home — A private lender will carefully assess your current appraisal. A homeowner must bring an appraisal to an appointment with a private lender. This document is central to calculating the overall terms of a potential second mortgage.
- Your home’s current condition — Any recent renovations and any ongoing potential structural issues such as mould, water damage, or foundation issues.
- The location of your home — As in any real estate transaction, the location of a given property will influence the overall mortgage financing decisions.
- The degree of equity in your home—Generally, a private lender will need to see at least 25% of existing equity.
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%.
Mississauga Real Estate and Mortgage Trends
A city with great transportation hubs to and from downtown Toronto and a host of head offices supplying the local workforce, the region’s draw is not hard to see. Coupled with parks and recreational facilities, Mississauga can offer all there is for a homeowner within a beautiful location.
Situated on the banks of Lake Ontario and just east of downtown Toronto, Mississauga is part of the Peel region. As of the last population census in 2017, the city had a population of 828,854. Its urban appeal and beautiful suburban neighbourhoods attract homebuyers, making it a popular place to live.
Like others in the province, Mississauga is an attractive location. The MLS® System of the Mississauga Real Estate Board reports a 43.2% increase from April 2023. The average home sale price is $1.1 million.
Considering this new reality, some homeowners may take advantage of newfound property appreciation by tapping into existing home equity to take out any number of second mortgage loan options. While this may be a preferred option, it may be more difficult to obtain mortgage financing from a Mississauga-based mortgage lender if a homeowner has poor credit.
Are second mortgage financing avenues open for a homeowner with damaged credit? The solution is with experienced private lenders operating across Mississauga and the GTA.
Options with Private Mortgage Lenders in Mississauga
Mississauga homeowners and borrowers, don’t let credit issues stop you from obtaining the mortgage financing you need.
Mortgage Broker Store has access to a broad network of private lenders in the Mississauga area. A private lender can discuss options with you directly, aiding in achieving your mortgage goals.