An alternative or private lender is a company or individual that works separately from banks, credit unions, and trust companies. Private mortgage lenders in Newmarket can supply mortgages for people who don’t qualify for a bank loan. They also work with applicants in Etobicoke, Oshawa, Pickering, and Ajax.
Understanding a bit about the town of Newmarket can help you make a good decision.
According to Statistics Canada numbers last updated in February 2022, the town of Newmarket had 87,942 residents in 2021. That represents a large jump from the 65,788 people who lived there in 2001.
The largest visible minority group in Newmarket is Chinese. According to the Statistics Canada census from October 2022, there were 8,635 people who claimed that background and lived in Newmarket. Most of the people ( 84,610) who live in that city carry on their conversations in English. The median age of people in Newmarket has risen from 35.1 years in 2001 to 41.6 years in 2021.
Newmarket is an affluent location. As of 2021, the median household income there was $110,000 dollars.
People who live in Newmarket want to understand all of their financial options including what private mortgage lenders can do for them. That means understanding the differences between these alternative options and more traditional choices.
Traditional Mortgage Requirements
There are several different categories of requirements and documents that you’ll need when you’re applying for a traditional mortgage.
- It’s important to have details on the property that you want to purchase.
- Of course, you’ll also need to have proof of your income and government documents that identify you.
- You’ll also need to supply details on the source of your down payment. That could include a gift, RRSP account, the proceeds from a previous sale, or your savings.
- Financial information is another requirement. That includes banking statements, your net worth, and your credit score.
You’ll also need to supply a list of investments and assets. Stocks, RRSPs, real estate, cars, and boats should be added in. A credit score is a major metric if you’re looking for a traditional loan. According to Equifax, mortgage applicants with scores below 660 are less qualified to get good rates and terms.
People who don’t qualify for these traditional loans can look to alternative sources.
Mortgages from Private Lenders
Newmarket private lenders provide registered mortgages secured against real estate. The Ontario Mortgage Act allows the holder of a registered mortgage to sell a property if the agreed to fees are not paid. Private Lenders supply loans that fall under the Act starting at $20,000. The balance generally needs to be repaid in one year, but longer periods can be negotiated.
People without traditionally verifiable income seeking second mortgages and other alternative products pay higher fees for these mortgages. For example, the rates for a second mortgage on an existing property average around 9-12 percent. For a first mortgage through one of these lenders, expect to pay somewhere between 7-8 percent.
There are other requirements for private mortgages. These are high-risk investments and alternative lenders want to be sure they can recoup their money.
- A home appraisal is generally required. The main goal is to put together some information so the current value of a property can be determined. Usually, this is done by assessing the condition of the property and comparing it to recent sales. Determining the condition of the location involves looking at exterior and interior size, maintenance and upgrades, and the age of important items like the roof. The neighbourhood and location are also taken into account.
- The value of existing debts is another factor that gets considered before any application is approved.
Banks put a heavy emphasis on an applicant’s credit score. These are just a few of the factors separating traditional from alternative lending requirements. Private lenders also put more focus on what’s called the Loan to Value (LTV) Ratio.
The LTV and Private Lender Mortgages
Private lenders calculate this ratio before making any offer. The LTV divides the amount owing on a mortgage by the property’s most recently appraised price. Many private lenders in Newmarket will only loan to a maximum of 75% LTV.
Here’s how the formula works.
If you own a property that has a market appraisal of a million dollars and you owe $750,000 on a mortgage, you can qualify for this type of private mortgage financing.
People who need to look for this type of financing often fall into one of several categories.
Reasons To Apply For a Private Mortgage
There are several reasons people find themselves looking for a private mortgage. They include:
- To stop a power of sale or a foreclosure. There’s a difference between these two financial tools, but the result is the same. The homeowner loses their property. With a foreclosure, the lender takes the title to the property. The homeowner sees nothing from the sale. With a power of sale, they might see some residual cash after the outstanding debts have been paid.
- For living expenses while suffering through a layoff.
- To pay for home repairs or renovations. According to Architectural Digest, a kitchen reno can set you back as much as $50,000 dollars.
- To pay off high-interest credit card debts. News reports from March 2023 peg Canadian credit card debt at a record number–$100 billion.
Our network provides mortgages for those rejected by traditional lending institutions in Newmarket and other parts of Ontario.
Newmarket Real Estate Trends
Newmarket MLS® stats for April 2023 report 147 new listings in the last 28 days. The average sold price in that time frame was 1.2 million. That represents a positive change for two different metrics. The monthly change was a bump of 2.6%, while the quarterly change was also positive at 0.7%.
The yearly change for housing prices in Newmarket did show a drop of 10.2% YoY. Out of 23 other locations in the GTA, Newmarket is the 7th fastest-growing location and the 12th most expensive.