Canadian banks are under government regulation, which turns many people away from them and leads them to private lenders. These individuals or businesses do not have the same restrictions as banks that are very keen on each client’s credit and do not loan people with a score below 600 points. They can service the hard-to-place loans that were denied by banks, meaning that even people with poor credit scores can qualify for a private mortgage. Private mortgage lenders in Pickering strive to serve those individuals who could not get traditional bank loans due to credit scores or other issues.
Mortgages from Private Lenders
Private mortgage lenders in Pickering love loaning out money as a registered mortgage. This agreement gives them the power of sale if a borrower fails to pay in full. The mortgage loan can be as low as $30,000 and must be paid in 12 months unless you ask for an exemption. The lender might give low-income earners more time to make monthly mortgage loan payments more affordable.
A private mortgage also offers mortgage loans to people without income or those seeking second mortgages, but the catch is in high prices that you must pay upfront. Unlike other types of mortgage loans, the lenders are unwilling to increase risk by paying appraisals, lawyers or other experts on your behalf. Private mortgage lenders make their profits from the real estate sector, which is why they are so interested in Pickering, a city in Ontario where real estate prices have been increasing for the last few years.
Why Do People Need Private Mortgages
During the mortgage application, you will be asked why you need the money. Don’t worry so much because private lenders are more lenient than banks, accepting nearly every explanation for needing the money. Some popular reasons are:
- To pay college or university tuition fees
- To pay for renovations or important home repairs
- To stop a power of sale
- To pay high credit card debt
- For living expenses after losing your job
Anyone who couldn’t get a bank loan yet has property can turn to private lenders who purposefully seek them out. They are ready to offer an ideal mortgage solution based on the equity in property rather than individual credit scores.
Quick Financing from Private Lenders
Bank loans are attractive, but they take an awfully long time to process owing to strict government conditions. Some people need funds so urgently that they can’t wait for a regular bank loan. They turn to private lenders, who quickly arrange financing to meet clients’ urgent needs. Our private lenders can create custom loan solutions and don’t have to follow the same rules as banks.
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%.
Information on Lenders in the Pickering Real Estate Market
Pickering, a city in Ontario, Canada, is often in the news for its real estate market. Prices are rising, and predictions suggest this will continue as more people move to enjoy Ontario’s real estate offerings. More people are substituting their income by becoming private real estate lenders in Pickering and other parts. Ontario is Canada’s economic hub and one of the best places to live.