A 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 not qualifying for a bank loan. They also work with Etobicoke, Oshawa, Pickering, and Ajax applicants. Understanding the town of Newmarket can help you make a good decision, and private lenders can help support homeowners.
Traditional Mortgage Requirements
When applying for a traditional mortgage, you’ll need several different categories of requirements and documents.
- It’s important to have details on the property you want to purchase.
- You’ll also need proof of your income and government documents identifying you.
- You’ll also need to supply details on the source of your down payment. That could include a gift, RRSP account, previous sale proceeds, or 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. 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 not qualifying 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-upon fees are not paid. Private lenders supply loans that fall under the Act starting at $20,000. The balance 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.
Other requirements apply to 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 property’s condition 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. We must compile the necessary information to accurately determine the current value of the property.
- The value of existing debts is another factor that gets considered before any application is approved.
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 will receive the remaining funds after settling outstanding debts.
- For living expenses while suffering through a layoff.
- To pay for home repairs or renovations. According to Architectural Digest, a kitchen renovation can set you back as much as $50,000.
- 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.
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%.
Newmarket Real Estate Trends
The largest visible minority group in Newmarket is Chinese. According to the Statistics Canada census from October 2022, 8,635 people claimed that background and lived in Newmarket. Most people (84,610) who live in that city carry on their conversations in English. Newmarket is an affluent location. As of 2021, the median household income there was $110,000. People living in Newmarket want to understand 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.
Newmarket MLS® stats for May 2024 report 232 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 0.3%, while the quarterly change was also positive at 1.6%.
The yearly change in housing prices in Newmarket showed a drop of 2.8% YoY. Out of 23 other locations in the GTA, Newmarket is the 7th fastest-growing location and the 12th most expensive.
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.