Canadian banks follow government rules that can be frustrating and time-consuming for people applying for loans. Many turn to private lenders who specialize in servicing hard-to-place mortgages the banks don’t accept. Private lenders can help applicants with credit scores that don’t meet the bank’s requirements. Learn more about how private mortgages blend well with North Bay’s real estate trends.
Mortgages from Private Lenders
North Bay private lenders register mortgage loans secured against real estate. Under the Ontario Mortgage Act, they can sell off a property in default if mortgage fees are not paid and the appropriate paperwork is processed.
Private lenders in North Bay will loan as little as $30,000 for one year. Riskier loans like second mortgages or those for people with no income attract higher rates. Private lenders generate profits through real estate investments. The North Bay real estate market is particularly attractive due to low operating costs and several other reasons.
Credit Scores and Private Mortgage Lenders in North Bay
Banks require certain credit scores before they approve loans. The numbers can vary, but Equifax considers a score between 620 to 724 as good. If you have a lower score (generally under 560), you’ll have a harder time qualifying for a loan. Private mortgage lenders in North Bay have a slightly different focus.
Do Private Lenders Require Collateral?
For all mortgage lenders, real estate is required as collateral. Private lenders will also insist on the owner having a large amount of home equity built up. While private lenders are considered alternative lenders, there are some parallels with a traditional mortgage. However, their biggest advantage is approving borrowers with poor credit, income, and employment. Private lenders would like to see 35% in equity for smaller cities and towns before they approve a mortgage. They also require an up-to-date appraisal.
Reasons for Needing a Private Mortgage
While applying, you must state why you need the money. Some popular uses for the money include:
- For living expenses after being laid off
- To pay tuition fees for college or university
- To stop a power of sale or foreclosure
- To pay off high-interest credit card debt
- To pay for home repairs or renovation
Private lenders target people who cannot access bank loans for several reasons. Our network of private mortgage lenders in North Bay offers mortgages to individuals rejected by banks.
Rapid Funding from Private Lenders
Major Ontario banks must follow comprehensive loan approval processes. Private lenders can provide mortgage loans in only two or three weeks. This is particularly helpful during a power of sale. Here are a few things that you can do so the process goes more smoothly.
- If you’re looking for a home equity loan through a private lender, be clear about what you want so they can put the proper terms together.
- Putting together a list of all your financial assets beyond your property helps.
- A list of all your outstanding debts is also important.
- Getting a recent appraisal on your property will help to move things along. Let the lender order it. Some won’t accept an appraisal ordered by the borrower.
A private lender also takes into consideration the location of your property.
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%.
Information on Lenders and the North Bay Real Estate Market
Here are some recent sales statistics in the area from the North Bay Real Estate Board. The number of homes sold through the MLS system of the North Bay Real Estate Board equals 98 units as of June 2024.
Home sales were 29.3% below the five-year average and 32.8% below the 10-year average for the month of June. The average price for homes in North Bay bucked the other trends. The average price of homes sold was $472,476, an increase of 9% from June 2023.
With a wide network of established and experienced private lenders across Ontario, Mortgage Broker Store can connect interested homeowners with private lenders to explore various refinancing options.
We can also directly negotiate private financing based on your specific financial goals. Poor credit and non-traditional income don’t have to be obstacles to obtaining a bridge loan or other loans to manage pressing monthly liabilities.
- Introduction
- Mortgages from Private Lenders
- Credit Scores and Private Mortgage Lenders in North Bay
- Do Private Lenders Require Collateral?
- Reasons for Needing a Private Mortgage
- Rapid Funding from Private Lenders
- Costs Involved in A Private Lender Mortgage
- Information on Lenders and the North Bay Real Estate Market