Banks are some of the most popular lenders in Canada but they are so reined in by the government that most people in need of loans wouldn’t qualify. People who do not have to meet the criteria for bank mortgages need to consider private lenders who are not restricted by strict government rules. This gives private mortgage lenders in Thunder Bay, Ontario the leeway to service those hard to place mortgages most avoided by banks.
Mortgages from Private Lenders in Thunder Bay
Private mortgage lenders servicing Thunder Bay in Ontario, like to give loans in form of registered mortgages secured by a property. With such an agreement, the private mortgage lender in Thunder Bay can sell off a property n default to try and recover some of their investment. The loan offered might be as little as $20,000 for 12 months unless a client requests otherwise. Most people with low monthly income choose to pay the loan over a longer period to reduce monthly instalments.
Second mortgages and people without an income present higher risk to the private mortgage lender in Thunder Bay who will not take on any expenses on the borrowers’ behalf. The client will be expected to pay upfront fees to pay real estate lawyers, appraisal, lenders’ staff and other experts needed to process the mortgage. Private lenders are particularly drawn to Thunder Bay as it is in Ontario, a province that has shown some of the highest real estate appreciation rates in the country.
Approval criteria for Private Mortgages
Private mortgage lenders in Thunder Bay are only interested in debts and appraised value of a house when assessing loan applications. Banks look at credit score to approve or disprove loan applications but that isn’t important to private lenders. Before giving a loan, they divide total value of debts by the appraised value of a home. This measure is called the loan to value ratio and it must be below 75% for private lenders to make you an offer. If your home worth $1,000,000 has debts of 600,000, the LTV is 60% and so you will get an offer for a good amount that will help you make some financial progress. Private mortgage lenders in Thunder Bay may not be bothered by a credit score but also being wary of risk, they will not loan to a property with too much debt.
Reasons for Needing a Private Mortgage
When applying for the loan, a private lender will ask you to state why you need the loan. This isn’t to approve or reject the request but simply for record keeping. Banks often reject mortgage applications for the explanation given. Customers of private mortgage lenders are free to choose how the money is spent as all needs are unique. The most common uses for the money include:
- To pay college or university fees
- For home renovations or repair
- For living expenses
- To pay off other high-interest loans
- To stop a foreclosure or resolve a power of sale
People who did not meet banks’ requirements can turn to private lenders who do not care much for the credit score. Our network of private lenders in Thunder Bay are ready to offer custom mortgage solutions for those who were rejected by banks and institutional lenders.
Fast Financing by Private Lenders
Loans from banks are definitely cheaper than private lender mortgages but it takes time before banks can approve loans. The government requires banks to follow a strict procedure, which cannot be sped up at any cost. This can be a major problem when people need urgent funding. Many people in urgent need of financing would rather borrow from private mortgage lenders in Thunder Bay who can process things much faster. If the situation so demands, you will get the money in as little as 24 hours. This is especially great when a borrower is faced with a power of sale, which cannot be reversed once activated.
Information on Private Mortgage Lenders on Thunder Bay
Thunder bay is in Ontario, a province in Canada that is subject to widespread debate. The entire sector has witnessed immense growth in the recent past, and this is the reason why so many people are turning to real estate as a means of earning extra income.
Of all the different types of lenders, private mortgage lenders have the most lenient approval criteria. Private lenders will generally provide mortgages up to 75% of the value of the property. Most private lenders can only offer mortgages on typical residential homes worth at least $100,000. The ratio between the value of the requested mortgage and the value of the property is called a “Loan-to-Value” (LTV) ratio and is the main factor when it comes to approval on a private mortgage. These criteria are different from those of Banks, Trust Companies, and Credit Unions, which will also consider a borrower’s income ratios, employment, and credit score in addition to their LTV ratio. Private lenders are usually not concerned with the creditworthiness of the borrower.
Since private mortgages are considered to be a high-risk investment, these lenders demand higher rates and fees. A borrower can expect to pay rates between 7% to 12% and fees equal to 4% to 6% of the mortgage amount. The rates are dependent on the LTV ratio, while the fees are dependent on the complexity of the mortgage, which includes the cost of dealing with any legal issues. Approval can also depend on the location of the property, and in general, larger cities will have higher maximum LTV ratios. This rate estimation tool will take into account all of these factors and estimate what interest rate you can expect to pay for a mortgage.
Private Mortgage Rates for January 2021