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 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)
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%.
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.
- Introduction
- Private Mortgage Lenders in Peterborough Options
- What Do You Need to Qualify for Private Mortgage Lenders in Peterborough?
- Types of Private Mortgage Loans That are Available for the Peterborough Homeowner
- Costs Involved in A Private Lender Mortgage
- Mortgage Broker Store Will Help Direct You Towards Private Mortgage Options