- Different Types of Mortgages Rates
- What Lending Options are Available for Sudbury Borrowers?
- Different Types of Mortgage Lenders in Sudbury
- Private Mortgage Loans in Sudbury
- How to Get a Private Mortgage Approval in Sudbury
- Benefits of Private Loans
- How to Find the Best Private Mortgage Options in Sudbury
Home of the world’s largest coin, The Big Nickel, Sudbury is a great place to live and raise a family. Nestled in the heart of Northern Ontario, Sudbury offers the educational and economic opportunities of living in a vibrant urban centre alongside the beauty and affordability of rural living. Sudbury is a growing community as well. It recorded a population of 166,004 in 2021, beating out Thunder Bay, Barrie and North Bay as the largest metropolitan city in Northern Ontario. If you own a home or are looking to own a home in the city, private mortgage lenders in Sudbury can work with you to achieve your goals, even if you have bad credit.
When it comes to real estate, Sudbury’s housing marketing is booming. Data recorded by the Canadian Real Estate Association and the Sudbury Real Estate Board found that the average sale price of a home in Sudbury grew to $458,727, increasing by over 10 percent from June 2021 to June 2022. Homes may be appreciating quickly in Sudbury, but the housing market in the city is still the second most affordable in Ontario, and it has some of the lowest property taxes in the province.
As many left the crowded and expensive cities during the pandemic for greener pastures, Sudbury has become a target destination. Getting a loan to buy a home in Sudbury may not be easy for those who do not have a high credit score, but private mortgage lenders like Mortgage Broker Store can help them get a mortgage to buy their dream home.
Also known as hard money lenders, private lenders are independent businesses and professionals who are not part of major financial institutions, but instead use their personal funds or that of their investors to provide mortgages, home equity loans, HELOCs and other loans to borrowers.
Different Types of Mortgages Rates
The two most common types of mortgage interest rates are variable and fixed.
Variable interest rate mortgages have a floating interest rate that is set to the prime rate. This means that as interest rates across the lending industry change, so too will the interest rate of your mortgage.
Fixed interest rate mortgages have a stable interest rate that does not change throughout the duration of the mortgage. This is the most common interest rate.
There are also adjustable rate mortgages. These types of mortgages employ a fixed rate for one part of the loan’s term and a variable rate for the other.
Most private lenders will charge a fixed interest rate for private loans.
What Lending Options are Available for Sudbury Borrowers?
Most borrowers in Sudbury are aware of traditional lenders like banks and credit unions when looking to get a mortgage or use home equity, but they are not the only places to get loans in Sudbury. These lenders may put borrowers through rigorous stress tests to qualify for a mortgage, and those they deem to have poor credit are denied a mortgage loan.
Private lenders are an alternative to traditional lenders, offering fewer restrictions and faster loan approval. Private lenders in Sudbury are commonly used by borrowers who are self-employed, have poor credit or those who are trying to buy unusual or undeveloped land. If a bank rejects your loan application, private lenders can work with you.
Different Types of Mortgage Lenders in Sudbury
Mortgage lenders in Sudbury can be divided into three broad categories:
A Lenders- Banks are referred to as A lenders. Criteria are often very stringent and narrow with borrowers routinely put through mortgage stress tests that require exemplary credit and substantial, easily demonstrated yearly-based incomes.
B Lenders- Credit Unions and Trust Companies are referred to as B lenders. Although they are a little more lenient than banks, yearly proven income and credit scores above 550 remain a requirement for mortgage approval.
C Lenders- Private lenders are referred to as C lenders. Private lenders can lend out mortgage funds on an individual basis or may be part of a group of private lenders. There are also mortgage brokers that specialize in lending out private mortgage loans.
What is the difference between a private lender and a hard money lender?
Private lenders and hard money lenders are one of the same. Both of these terms represent non-traditional lenders who offer loans in exchange for equity. If the borrower fails to repay the hard money loan, the lender will use their equity as collateral. In other words, they will sell the property to get their money back in the event of a default.
What Do Private Lenders Look For?
Private lenders need proof that you can pay off your loan. They also need to make sure that the loan you are taking out is not worth more than ¾ of the home you wish to buy or take a loan out on.
What do Banks Look For?
Banks prefer full-time salaried employees as opposed to contract or self-employed income. Credit scores are weighed very heavily and the banks require borrowers to have a credit score of at least 620 out of 900 to be considered. They have strict requirements for approving loans but charge lower interest rates and fees than other lenders. Credit unions and trust companies also prefer traditional-based income and require strong credit scores to approve mortgages and other loans.
Private Mortgage Loans in Sudbury
Even if Sudbury homeowners have poor credit, private lenders can still approve their home equity loan. Other criteria will be assessed. If borrowers want loans in Sudbury, there are several private lending options available including:
- Bad Credit Mortgages
- Home Equity Loans
- Home Equity Lines of Credit (HELOC)
- Second Mortgages
- Home Renovation Loans
- Bridge Financing
- Debt Consolidation Loans
- Reverse Mortgages (open to those 55 years of age and over)
- Renegotiated terms on a 1st mortgage
With any of these loan options, a private lender will be assessing several key criteria, including the current appraised value of the home, and how much equity the borrower has in their property.
How to Get a Private Mortgage Approval in Sudbury
Private lenders will not approve loans worth more than 75% of the property’s value, which is referred to as the Loan-To-Value (LTV) Ratio threshold. A private lender will also prefer to see more than 25% existing equity in your home. A loan with a higher than 75% LTV is deemed high-risk for private lenders and they will likely reject your loan application.
A private lender will typically attach an interest rate of 7% to 12% depending on the type of loan being negotiated and the borrower’s financial stability. Even though credit score is not a factor for granting mortgage approval, it may impact the borrower’s interest rate, with the lower the score the higher the interest charged. Fees associated with most private loans often range between 3% to 6% of the loan’s total value.
When contemplating private mortgage financing you can do a few things to prepare:
- 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
Benefits of Private Loans
Private loans have some distinct advantages for borrowers in Sudbury:
- Private mortgage financing is often on a short-term basis (typically 1-3 years). This time provides an opportunity for the borrower to improve their credit score and payment history. By making mortgage payments on time and throughout the course of the private loan, your credit score will improve and allow you to get more favourable loans in the future.
- Private loans are negotiated quickly and the process is straightforward. If financing is necessary to pay debts or make investments, private lenders can provide secured mortgages and home equity loans much faster than banks or credit unions can.
- Regardless of your credit score or the type of loan you are considering, a private lender can work with you as long as you can afford the loan.
- Private lenders can get your property quickly appraised to help you determine what kind of home equity loan you can expect, which is particularly useful for those considering debt consolidation.
- Regardless of credit score, any Sudbury homeowner with enough accrued home equity can use it to access a large sum of cash by getting a home equity loan. They can use this money for anything they want from renovating or repairing their home to consolidating debt, even funding a wedding or vacation.
How to Find the Best Private Mortgage Options in Sudbury
Don’t let credit issues stand in your way of purchasing a home in Sudbury or taking out hard-earned equity from your property. As a seasoned private lender with decades of experience in Ontario’s real estate industry, Mortgage Broker Store has access to a broad network of private lenders in and around Sudbury Ontario. They can use their connections to find suitable lenders and negotiate with them to find the best deals possible for their clients.
If you are looking to find the best option for your Sudbury loan, call our team at Mortgage Broker Store at (416) 499-2122 or fill out a form on our website for a FREE consultation with our mortgage brokers. We can walk you through the loan approval process, keeping you informed and aware of all options, and once we find suitable lenders in Sudbury, we will help you choose the best one for your needs.
Private Mortgage Rates for December 2022