Are you wondering how much private lenders charge for a mortgage? Consider that a traditional mortgage through the bank is getting harder to qualify for. Private lenders in Ottawa are an excellent alternative for people turned down by banks. Private mortgage lender requirements are far less strict than those of the banks. They focus more on the value of your property and less on your credit score.
How Private Lenders Operate
As traditional lenders tighten their criteria, many borrowers are turning to private lenders to navigate the mortgage process more easily. While mortgage rates may be higher, the flexibility in monthly payments and a streamlined mortgage application process can make these short-term loans appealing. Moreover, mortgage agents familiar with alternative lending can help clients understand their options, especially those with less-than-perfect credit histories.
Private Mortgages
Private lenders in Ottawa can include both individuals and companies looking to invest in the local real estate market. However, not all private lenders invest directly in real estate. Some operate as part of Mortgage Investment Corporations (MICs) or larger financial organizations that pool funds to lend, offering diverse opportunities beyond individual local investments. The lenders will lend $30,000 or more for one-year terms. Most private lenders will secure the loan with the property that can be sold if the borrower does not make their payments.
These mortgage companies very often provide private mortgage financing alternatives for those who may have a poor credit rating to qualify for traditional lending options. Through the assistance of a licensed mortgage broker, borrowers are able to secure short-term mortgage solutions, which may include bad credit mortgages or residential mortgages, at private mortgage rates that are competitive in nature. With the ability to work directly with a mortgage investment company, options range from a wide array of loan types that are sure to fit the individual’s needs. If one is in mortgage distress or needs an exit strategy that offers some flexibility, a licensed broker can guide you in all private mortgage transactions while pushing for the lowest possible rate. From lender to lender, you will receive instructions on how to provide a perfect mortgage experience with ideal terms.
Quick Mortgage Financing
Banks and credit unions have long approval processes, even when all the correct documents are provided. Mortgage Broker Store can provide financing for time-sensitive real estate deals. Connect with one of our Ottawa private lenders today.
We partner with an extensive database of lenders in Ottawa and the surrounding areas like Nepean, Kanata and Orleans. Mortgage Broker Store provides funding that can even stop a foreclosure or power of sale.
Our network includes both alternative lenders and private investors who are ready to offer flexible financing options. Whether you’re seeking residential mortgages or a commercial mortgage, our experienced mortgage broker can help you navigate the complexities of private mortgage financing. With a focus on your property’s value rather than solely on your credit rating, we can assist those with poor credit who might struggle to secure a traditional bank mortgage. Plus, our private mortgage rates and short-term mortgage options allow for quick and effective solutions tailored to your financial needs, providing a viable alternative to traditional mortgage lenders.
First and Second Mortgages Explained
A first mortgage is the primary loan secured by a property, determined chronologically rather than by its purpose. It holds the senior position among any other loans or liens on the property. Even if a home is fully paid off, a new loan taken against the property can still be a first mortgage. Additionally, a property can be purchased using both a first and a second mortgage simultaneously. Most first mortgages have repayment terms ranging from 20 to 30 years.
A second mortgage is taken out after a property already has a first mortgage. It allows homeowners to access equity for various purposes, from home renovations to debt consolidation. These can be used for an investment property.
Reasons for Getting a Private Lender Mortgage
A private mortgage lender in Ottawa will ask why you need the money. Common reasons include:
- A traumatic life event like a relative’s death or a car accident
- To upgrade or renovate an existing building
- To pay off high-interest debts
- Loss of work or other income
- To pay for a higher education
Unlike traditional financial institutions that may impose strict credit requirements and lengthy approval processes, private lenders offer diverse mortgage products that cater to various needs, including self-employed mortgage options for those with irregular income. The type of property being financed can also influence the terms offered, allowing borrowers to negotiate better mortgage rates, especially during mortgage renewals or when refinancing existing loans.
Self-Employed Borrowers
In cases of self-employed borrowers or when income verification is an issue, private lenders prove to be attractive for borrowers who fail to meet the strict criteria laid down by conventional lenders. An experienced mortgage broker can help guide homeowners toward equity loans, debt consolidation solutions, or additional funds, depending on their financial needs. These private mortgage transactions include private individuals or mortgage investment companies that will have more flexibility in the type of loan or mortgage interest rate, thus enabling borrowers to access more capital.
Is It Safe to Borrow From a Private Lender?
Concerns could be raised over the safety and reliability of borrowing from a private lender when considering a mortgage. It is vital to comprehend that private lenders can offer financial solutions, often very different from traditional banking, for those who do not satisfy traditional lending criteria. As with any financial decision, however, private borrowing involves certain risks and rewards that a borrower should consider before entering into an agreement. The key is to do thorough research, evaluate their terms of lending, and make sure their practices will align with your financial goals.
Understanding private mortgages includes getting an overview of different milestones of the application process: key steps involved in it as a borrower goes on seeking finance effectively. These vary right from preparing documents, application submission, to being approved, which all will compose to complete the objective to get desired output. Understanding the mentioned steps would help facilitate not only smoothness in that case but also success.
The Application Process for Private Mortgages
When it comes to private mortgages, one needs to consider the different stages that come into play during the application process. It is a journey to climb up the ladder of several major stages that a borrower will have to go through in order to get his or her financing on track. From preparation for documentation to application and sanction, each phase is vital for the desired outcome. Knowledge of these steps will help ensure that such people have a smoother experience while availing themselves of private mortgages. Reach out to our private lenders to understand the application process further.
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%. If you’re a borrower with bad credit, you’ll find more information below.
More Information on Private Mortgage Lenders in Ottawa
Here’s another consideration. The Bank of Canada raised its policy interest rate.
Applying for a traditional mortgage still means you need to undergo a stress test. You’ll need to be able to afford payments as high as 2% over and above your mortgage contract rate. Homeowners might even need to pay the highest 5.25% more. It all depends on which number is higher.
Ottawa’s private mortgage lenders endure less government oversight. They can provide mortgages when banks cannot.
Many people applying to private mortgage lenders have been turned down by a bank for a mortgage. Many of our clients have bad credit or insufficient income, and we specialize in getting them mortgages. We also help clients repair their credit and become eligible for bank loans in the future.
Ottawa Housing Stats
Ottawa is Canada’s capital city and its federal government’s headquarters. The average sold price for a house in Ottawa was $639,461, according to current MLS stats for January of 2025. Those numbers represent 1.2% positive year-over-year change. The average number of days on the market for a house in Ottawa was 44 days.
Working with Us
By working with our trusted lending partners, we help clients secure the perfect mortgage for their needs, whether it’s a short-term loan or a long-term solution. Our team focuses on building a positive repayment history that can improve access to traditional lending institutions over a period of time. We provide clear cost disclosures, including set-up fees and lender fees, so borrowers understand the full picture. Along with competitive rates, we offer the right type of loan that includes a personal approach and emphasizes the human element in mortgage lending to help the self-employed and others through some tough finances.
Working with a mortgage broker store offers several significant benefits for potential borrowers. These advantages include access to a wide range of mortgage products, expert guidance through the lending process, and personalized service tailored to individual financial needs. Mortgage brokers are knowledgeable about the lending landscape and can help navigate the complexities of securing a mortgage, ensuring that clients find the best fit for their unique situations.
- Introduction
- How Private Lenders Operate
- Private Mortgages
- Quick Mortgage Financing
- First and Second Mortgages Explained
- Reasons for Getting a Private Lender Mortgage
- Self-Employed Borrowers
- Is It Safe to Borrow From a Private Lender?
- The Application Process for Private Mortgages
- More Information on Private Mortgage Lenders in Ottawa
- Ottawa Housing Stats
- Working with Us