Private mortgage lenders are a sensible alternative for people not qualifying for a traditional bank loan. Banks and credit unions have strict lending criteria and a long and involved process. Their requirements include a good credit score and stable, verifiable income.
People with poor credit scores have better luck with private mortgage lenders in Oshawa, who are less regulated. Private lenders have requirements that focus on the equity you’ve built up. They place less emphasis on credit ratings.
Private lenders are also less regulated. That means their approval process is more streamlined than the traditional model. Governmental regulatory bodies do not oversee these lenders, but their mortgages must adhere to the laws described in the Ontario Mortgages Act.
Who Are Private Lenders?
Ontario has three different categories of lenders. Private lenders in Oshawa fit into the 3rd one.
- A lenders include banks with strict criteria for mortgage financing. They look for low-debt ratios, straightforward yearly income and substantial and excellent credit scores.
- B lenders include trust companies and credit unions. Although they are slightly more relaxed than banks, a credit score of at least 560 is usually necessary.
- C lenders are where private lenders in Oshawa fit in. Private lenders are individuals or companies that make money by lending on mortgages. These alternative lenders can overlook high debt ratios, damaged credit and other loan approval criteria.
These private lenders structure negotiated loans and process them quickly.
These loans are usually for a short-term period of one to three years. Read on to learn about their specific approval requirements.
Criteria for Approving Private Lender Mortgages
Private lenders in Oshawa are organizations or individuals lending money to applicants whom more traditional institutions have turned down. In addition to the equity built up, these alternative lenders consider the property’s condition and the appraised value.
They also use what’s called the Loan-to-Value (LTV) ratio. This number is usually determined by starting with all existing mortgages plus all proposed mortgages, which are divided by the appraisal value.
The allowed LTV ratio is usually 75% of the appraised value. Therefore, if the property has a market value of $1 million and $750,000 on an outstanding mortgage, the LTV is 75%.
Private Lenders in Oshawa and Equity
Private lenders usually seek to approve property owners with more than 25% of their equity available. A home appraisal is vital; many private lenders will ask for one. An appraiser will look at several factors, such as the state of repair the property is in. Here are a few other things they might want to look at:
- A property survey helps mark out the boundaries.
- Include receipts and descriptions for home improvements you’ve made within the last 15 years.
- Remember to add in any previous appraisals.
The home appraisal is one step in getting an LTV done. This formula allows private lenders to offer greater flexibility to applicants, enabling these alternative lenders to offer loan opportunities to people who might not otherwise qualify.
There are several reasons why people turn to private lenders in Oshawa
Reasons for Needing a Private Lender Mortgage in Oshawa
Private lenders appeal to people who can’t get a traditional mortgage. These alternative lenders attract people for a variety of other reasons, including borrowers who are looking to:
- Pay living expenses after a layoff
- Stop a power of sale or foreclosure
- Pay high-interest credit card interest
- Pay tuition fees for college or university
- Pay for home repairs or renovations
Mortgage Broker Store has a private lender network ready to work with individuals turned down by banks.
Swift Financing from Private Mortgage Lenders in Oshawa
Banks must follow a long process before approving mortgages. Their criteria focus is more on credit scores. Equifax notes these numbers range from 300 to 579 under the poor category. Traditional lenders will want to ensure that your income is stable and meets certain total debt service thresholds (TDS) thresholds. Banks and credit unions also use the gross debt service (GDS) as a metric to approve a mortgage, slowing the approval process down even more.
On average, approval from a traditional lender can take a few days to several weeks.
Private lenders in Oshawa have a more streamlined and quick approval process. Here are some helpful tips on how you can make that even faster. Remember, much of the faster approval process emphasizes equity rather than your credit score. That’s good news when you add it to the real estate numbers for Oshawa.
Information on the Oshawa Real Estate Market
The current Oshawa MLS stats report an average house price of $826,775 in the last 28 days and 658 new listings as of June 2024. Those numbers represent an increase of 2.6% monthly and a quarterly jump of 3.4%.
Looking for Private Mortgage Lenders in Oshawa?
Mortgage Broker Store focuses on numerous mortgage-related products. One of our priorities is mortgages that don’t meet traditional lending institution requirements. Our team includes private lenders, brokers, and licensed mortgage agents.
- Introduction
- Who Are Private Lenders?
- Criteria for Approving Private Lender Mortgages
- Private Lenders in Oshawa and Equity
- Reasons for Needing a Private Lender Mortgage in Oshawa
- Swift Financing from Private Mortgage Lenders in Oshawa
- Information on the Oshawa Real Estate Market
- Looking for Private Mortgage Lenders in Oshawa?