Peterborough is an attractive place to live. With a beautiful setting and relative proximity to larger urban centers, including Toronto and the surrounding GTA, many choose to reside in the Peterborough area. With a population of 84,230 as of the 2017 population census, Peterborough is a city rich with opportunities for many outdoor activities and provides a relaxed lifestyle for its residents. Why would you need to choose private mortgage lending in Peterborough?
The real estate market in Peterborough is robust and remains an attractive area to buy property. In the last year, similar to many cities of varying sizes across the country, Peterborough has seen a steep escalation in property appreciation and a marked increase in house sales.
Private Mortgage Lenders in Peterborough Options
With numbers like this, it may be tempting to try to obtain mortgage financing to buy a property. It may also be equally tempting to consider taking out existing equity in your home to take out any number of second mortgage options. It would be beneficial to be aware of the varying lending options that are open to a Peterborough borrower/homeowner. The mortgage industry tends to classify lenders into three broad categories:
- A Lenders– Banks are representative of A lenders. Banks tend to lend out predominately long-term amortized mortgage options and demand very strict criteria to obtain mortgage financing. These lenders routinely put borrowers through mortgage stress tests that require exemplary credit and a substantial and easily proven yearly-based salary. A lenders may not be an option for those with less-than-perfect credit scores or different types of work such as contracts or those that are self-employed.
- B Lenders– Credit unions and trust companies are represented by B lenders. These lenders may be a little more lenient than their bank counterparts, however strong credit is still required (usually credit scores need to be at least 550) and these lenders are still looking for substantial household income to secure mortgage financing.
- C Lenders– Private lenders can lend on an individual basis as well as part of a group of private lenders. There are also mortgage brokers available that specialize in private mortgage lending options for a borrower/homeowner that may have damaged credit, hard-to-calculate yearly income or may require short-term and quickly negotiated mortgage financing to address immediate financial goals. C lenders will be able to overlook credit issues and look to different criteria to approve mortgage financing.
What Do You Need to Qualify for Private Mortgage Lenders in Peterborough?
Private lenders can base mortgage loan approval on criteria beyond credit scores and traditional income sources. C lenders will be assessing:
- Any additional assets
- The appraised value of your home
- The degree of equity that exists in your property
- All sources of income are considered: freelance and contract income, spousal and child support, investment income, and rental income from additional owned properties.
A private lender will calculate the Loan-to-Value (LTV) and will lend up to 75% LTV (which represents 75% of the appraised value of your property). These lenders will also require at least 25% of existing equity in your home if you are seeking a second mortgage option using available equity in your property. So what should you do before sitting down with a Peterborough-based private lender, and what documents will you need?
- Research good pre-approval rates
- Be in contact with a broker for direction
- Bring a list of current assets
- Bring a recent appraisal for your property
- Bring a recent credit report
- Gather all paperwork necessary, including proof of income, investment statements, and proof of assets
Types of Private Mortgage Loans That are Available for the Peterborough Homeowner
There are many reasons that Peterborough borrowers/homeowners may be seeking private secured mortgage financing. If you’re looking to buy into the local market, require a first mortgage (principal mortgage), and have damaged credit, a private lender can negotiate a short-term loan to help purchase a home and give you time to rebuild your credit. Conversely, if you are an existing homeowner, a private lender can negotiate a private second mortgage type, depending on your unique financial goals.
Private mortgage loans typically span 1 to 3 years with higher interest rates than bank loans. Generally, a private lender will charge between 8% and 12%, and fees to obtain the loan will range from 3% to 6% of the total cost. Private lenders can negotiate a range of mortgage loan options, including:
- Home equity loans
- Home Equity Lines of Credit (HELOC)
- Home renovation loans
- Bridge financing
- Debt consolidation loans
- Renegotiated terms on a principal (1st mortgage)
Mortgage Broker Store Will Help Direct You Towards Private Mortgage Options
Credit issues need not be a barrier to obtaining mortgage financing. Private lenders are available to provide short-term mortgage loan solutions. You can leverage equity from your property for necessary expenses or financing your first home in the Peterborough area. Mortgage Broker Store has access to a broad network of private lenders in the Peterborough area. A private lender can meet with you to discuss options directly, helping you achieve your mortgage goals.
A private lender will review your finances and offer various loan options to meet your financial goals. Mortgage financing is available to help restore credit and enable Ontario borrowers to fix any credit problems that will ensure favourable terms on future mortgage loans.
Looking for expert guidance in navigating the world of private mortgage lending in Ontario? Look no further than Mortgage Broker Store. Jonathan Alphonso and our team specialize in connecting clients with the perfect private lender tailored to their needs. Whether you’re seeking a first mortgage, second mortgage, or specialized loan, we’ve got you covered.