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.
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. They look at other factors like the equity you’ve built up, the appraised value, and The Loan To Value calculation.
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 150 as of June of 2022.
Sales in the area were 2.3% above the five-year average and 2.7% higher than the decade average for June.
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 out 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.
Approval Criteria for Private Lender Mortgages
Private lenders focus on market value and existing debts on a property. Banks, on the other hand, mainly consider credit scores when evaluating mortgage applications.
Private lenders divide the debts on a property by its appraised price to get its loan-to-value ratio. They will only loan to properties with LTV of 75% or less. If a property is sold off the initial mortgage holder reclaims their funds, followed by the next lender until each has been paid. The less equity there is left, the greater the chance a lender can lose money when the power of sale process is finished.
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 that they approve 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 will be required to 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 offer mortgages to individuals who were rejected by banks.
Rapid Funding from Private Lenders
Major Ontario banks must follow comprehensive loan approval processes. These can’t be circumvented and they can be a major issue for sellers who need money urgently. Private lenders can provide 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. Urban properties are considered more desirable and less of a financial risk to one of these lenders
Information on Lenders and the North Bay Real Estate Market
Most recent statistics have the number of houses sold in North Bay as of July 2022 at 116. This is a sharp drop of 14.1% YoY. Home sales in the area had dropped 21.1% underneath the five-year average. The 10 year average for the month of July saw a drop of 18.4%.
The average price for homes in North Bay bucked the other trends. The average price for July 2022 was $400,179. That represented a gain of 6.3% from July of the previous year.