Private mortgage lenders can help borrowers who get turned away by banks, credit unions, and other financial institutions access the financing they need to purchase property in North York or tap into their growing home equity. Private mortgage lenders are much more willing to offer loans in North York due to the region’s highly valued real estate market.
North York Real Estate Today
North York is one of the largest and most vibrant neighbourhoods in all of Canada. Home to tens of thousands of businesses, the Home Depot and McDonald’s Canadian corporate headquarters, it is widely considered to be the secondary economic hub of the GTA next to downtown Toronto.
Since the end of World War II, North York has been experiencing sustained and rapid population growth. This growth, coupled with little space to build new homes, has made property in the region a hot commodity. Despite covering an area only slightly bigger than 170-km², North York has a population of over 600,000 as of the 2016 census, making it one of the densest urban communities in Ontario.
North York Real Estate Growth
Reflecting broader trends across Toronto and all of Ontario, North York’s real estate market has been consistently growing at an exponential pace throughout the past decade. According to data from the Toronto Real Estate Board:
In December 2012, the average price of a home in North York was $351,900.
In December 2017, the average price of a home in North York increased to $611,300.
In December 2022, the average price of a North York home had grown to $875,400, more than doubling in value within a single decade.
With such a robust housing market in North York is. Many people want to and have moved to the community. For those looking to get a mortgage to purchase property in the city or tap into their valuable home equity, they have options. Even if a bank turns them down for a loan, they can likely get the funds they need with a private mortgage lender.
North York Private Lender Mortgages
While most people initially think of banks and credit unions when they seek financing, these institutions are not the only options they have at their disposal. They can also secure financing from a private lender in North York.
Private lenders are individuals and businesses that offer lending services. Just like banks, they can provide mortgages and other loans to borrowers who meet their standards. If a borrower is approved for a loan, they will be charged interest on top of repaying the money they borrowed.
Private lenders in North York can offer loans as low as $30,000 and mortgages worth millions. Private loan interest rates typically range from 7%-15% depending on the value of any existing mortgages attached to the property, the property’s condition, the credit score and the income of the borrower, among a host of other factors.
Private lenders can charge an administration fee worth 3-6% of the value of the mortgage. This fee is used to pay any mortgage brokers, real estate lawyers, and appraisers, among other staff, needed to process the mortgage.
Private lenders typically only offer loans that are secured by real estate. With a highly valued and growing real estate market like the Greater Toronto Area, borrowers are much more likely to get their private loan approved if they live in North York or downtown Toronto compared to a rural district. The more valuable homes are, the more likely private lenders will be willing to approve a loan application.
Mortgage Default – Power of Sale and Foreclosure
For both banks and private lenders, if a borrower defaults on their mortgage, they will take legal action to get their money back. Banks and most other financial institutions will proceed with foreclosure if their loan is in default, while private lenders will initiate a power of sale.
During a power of sale, the private lender would sell the home to get their money back and return any remaining funds back to the borrower. During a foreclosure, the lender will take the title to the property and become the new homeowner, and the borrower gets nothing.
The good news is that there are ways to stop power of sale or foreclosure with the right help. Click here to learn more about how you can stop power of sale or foreclosure in Ontario.
Benefits of Private Lender Mortgages
Mortgage Approval Requirements
Banks and other traditional lending institutions have very strict regulations that dictate who is eligible for loans. Borrowers need at least two years of income verification, a detailed credit history and a credit score of at least 630 just to be considered for a mortgage in North York.
Private lenders are not regulated to the same extent as major financial institutions in Ontario, and as such, they have a much greater degree of flexibility when working with borrowers.
Private lenders do not require any specific credit score or verified income to approve loans.
Employment Status
Most banks are hesitant to lend to individuals who are not salaried employees. Even with income verification and high levels of income, major lending institutions often deny applicants who are self-employed.
Private lenders will not let the employment status of a borrower impact their mortgage eligibility.
Use of Funds
Unlike bank loans, private loans can be used for a variety of different reasons, including:
- Paying off other high-interest debts
- Purchasing or drawing equity from an undeveloped or unusual plot of land
- Supplementing income from lost employment
- Paying Tuition
- Renovating or repairing a property
- Paying emergency bills
Faster Loan Processing
Private mortgages and loans can be processed much faster, helping borrowers get funds in days instead of weeks to months.
Approval Requirements for Private Lender Mortgage
As previously mentioned, private lenders in Ontario do not use credit scores or income to determine mortgage approval. Private mortgage lenders use a metric called the loan-to-value ratio, or LTV, to determine loan eligibility.
LTV is a comparison of the value of the mortgage or loan with the value of the property being used to secure the loan. In Ontario, private lenders will approve loans with an LTV of up to 75% of the value of properties in urban areas and an LTV of up to 65% for homes in rural locations.
For example. If a home in North York costs $1 million, you can get approved for a private mortgage worth a maximum of $750,000 or 75% of the total market value of the home.
Private lenders in North York will not turn down borrowers based on their credit score or income, but they will use these factors to determine the interest rate charged to the borrower. The higher the credit score and income of a borrower, the lower rate of interest that will be charged and vice versa.
Contact Private Mortgage Lenders in North York
Over the decades, the real estate markets in North York and communities across Toronto and Ontario have experienced explosive growth in value driven by limited housing supply coupled with sustained population growth. In 1982, the average price of a home in the region was $95,496. By 2022 the average home in North York and Toronto reached over $1 million.
As an active mortgage broker in Ontario for over a decade, Mortgage Broker Store has been working with hundreds of active private mortgage lenders across the province and in North York. Our team of mortgage brokers can tap into our network of relationships to browse, compare and negotiate mortgages to find the best deals available. Contact our team to learn more about private mortgages and explore the best options for your needs, regardless of your employment or credit history.