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 a multitude of outdoor activities and provides a relaxed lifestyle for its residents.
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 the number of house sales.
Real estate statistics released by The Peterborough and the Kawarthas Association of Realtors indicate that the selling price of a single-family detached dwelling rose significantly by 42.7% from the same time last year. March 2021 sales saw the average home price rise to the historic high of $744,760 which represents a whopping 59% increase from March 2020.
Lending Options in Peterborough- Private Lenders Can offer Mortgage Financing for Those with Poor Credit
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. The 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, 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 Financing?
Private lenders can base mortgage loan approval on criteria that go beyond credit scores and traditional income sources. C lenders will be assessing:
- The appraised value of your home
- The degree of equity that exists in your property
- Any additional assets
- All sources of income including freelance income, contract income, spousal and child support monthly payments, and other forms of investment income including rental income on an additional owned property.
A private lender will be calculating 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% 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?
- Know your credit score and try to increase your credit score before seeking pre-approval
- Gather all paperwork necessary including proof of income, investment statements, and proof of assets
- 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
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 looking to buy into the local market and 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 then a private lender will be able to negotiate a private second mortgage type depending on your unique financial goals.
Private mortgage loans tend to be 1 to 3 years in length and have higher interest rates associated compared to their bank counterparts. Generally, a private lender will charge between 7% to 12%, and fees to obtain the loan will range from 3% to 6% of the total cost of the loan. 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. It is possible to take out hard-earned equity from your property to pay for needed expenses or obtain financing toward a 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 will be able to sit down with you and discuss your options directly which will help you achieve your mortgage goals.
A private lender will look at your complete financial picture and provide you with different loan options to address your financial goals. Mortgage financing is available to help restore credit and enable Ontario borrowers to fix any credit problems that will ensure favorable terms on any future mortgage loans.