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 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.
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%.
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.