Private mortgage lenders can help borrowers who get turned away by banks, credit unions, and other financial institutions access the financing they need in North York or tap into their growing home equity. Private mortgage lenders are much more willing to offer mortgage loans in North York due to the region’s highly valued real estate market.
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. 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 mortgage loans as low as $30,000 and mortgages worth millions. Interest rates for private mortgage loans generally range from 8% to 12%, influenced by existing mortgages, property conditions, borrower credit, and income.
Private lenders can charge an administration fee worth 3% to 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. 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
If a borrower defaults on their mortgage, both banks and private lenders will take legal action to get their money back. Banks and most institutions use foreclosure for defaulted loans, while private lenders initiate a power of sale.
In a power of sale, the lender sells the home, recovers the money, and returns any remaining funds to the borrower. In foreclosure, the lender takes the property title and becomes the homeowner, leaving the borrower with 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 stringent regulations that dictate who is eligible for loans. Borrowers need at least two years of income verification. They need a detailed credit history and a credit score of at least 630 just to be considered for a mortgage in North York.
Private lenders in Ontario have more flexibility than major financial institutions due to less regulation. They 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 income levels, major lending institutions often deny applicants who are self-employed.
Private lenders will not let a borrower’s employment status impact their mortgage eligibility.
Use of Funds
Unlike bank loans, private mortgage 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 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 mortgage loan eligibility.
North York is one of Canada’s largest and most vibrant neighbourhoods. Home to tens of thousands of businesses, the Home Depot and McDonald’s Canadian corporate headquarters are widely considered the secondary economic hub of the GTA.
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.
LTV compares the mortgage or loan value with the property value used to secure the loan. In Ontario, private lenders will approve mortgage 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 won’t reject borrowers based on credit score or income but will adjust interest rates accordingly. Higher credit scores and incomes result in lower interest rates for borrowers and vice versa.
North York Real Estate Growth
North York’s real estate market has grown exponentially over the past decade, mirroring trends across Toronto and Ontario. According to data from the Toronto Real Estate Board:
In December 2012, the average price of a home in North York was $351,900, then in 2017, the average price of a home in North York increased to $611,300. In July 2024, the average cost of a North York home had grown to $787,909, more than doubling in value within a single decade.
With such a housing market in North York, 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. If a bank turns them down, they can likely secure the funds they need with a private mortgage lender.
Contact Private Mortgage Lenders in North York
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. Our mortgage brokers can leverage our network to browse, compare, and negotiate the best mortgage deals available. Contact our team to explore private mortgage options suited to your needs, regardless of your employment or credit history.