Canadian banks function under strict government regulations which make it incredibly hard for borrowers to get mortgages and loans across Ontario and all of Canada. While many individuals may still qualify for bank mortgages, there are those who do not meet the stringent requirements. In Timmins, those who cannot secure the financing they need from banks have another option: private mortgage lenders.
Private lenders are not subject to the same regulations as Timmins banks, credit unions, trust companies, and other institutional lenders. They often work with individuals who these traditional lenders reject.
Banks will require a borrower to have a very high credit score to be considered for financing. Banks generally prefer mortgage applicants with a credit score over 620 points. This requirement alone will disqualify most people in Ontario. Private lenders don’t use borrowers’ credit scores to determine which mortgage applications they approve. Many private mortgage lenders in Timmins specialize in providing bad credit mortgages to borrowers with a credit score below 620.
Anyone looking to get a mortgage with low credit or seeking additional funds can look for a private lender to get the mortgage loans they want.
How Private Mortgage Lenders Work in Timmins
Private mortgage lenders in Timmins provide mortgage loans secured against property, almost always residential real estate. Under the Ontario Mortgage Act, a registered mortgage allows a private lender to sell the property to recoup their investment if a borrower defaults on their mortgage. The most common way a lender recoups their money is by using a Power of Sale action, which usually takes 4 to 6 months.
Private mortgage lenders can provide mortgages to purchase homes of any size or type. They can offer a greater range of mortgage solutions for borrowers than banks. They can offer multi-year mortgage terms for hundreds of thousands of dollars or loans as low as $30,000 and loan terms as short as one year.
Borrowers who want to repay loans in small, more affordable instalments can negotiate a longer repayment period. When determining interest rates and fees, a general rule is that riskier mortgages incur higher charges.
Private mortgage fees are usually paid upfront to cover costs for staff, real estate lawyers, home appraisers, and others involved in arranging the mortgage.
Private Mortgage Services in Timmins, Ontario
Borrowers in Timmins can access a wide range of financial services when they work with a private lender, including:
- First, Second and Third Mortgages
- Home Equity Loans
- Home Equity Lines of Credit (HELOC)
- Loans to Consolidate Debt
- Bridge Loans
Reasons for Needing a Private Mortgage
When applying for a private mortgage, you must explain why you need the loan. Private lenders are more lenient compared to banks and accept many reasonable answers. The popular reasons include:
- Paying off high-interest debts
- Funding home renovations or repairs
- Covering living expenses after losing a job
- Stopping a power of sale or foreclosure
- Paying tuition fees for university or college
Another group often assisted by private mortgage lenders includes individuals unable to secure loans from banks or credit unions. These are the most common kinds of clients that seek private lenders.
Quick Funds from Private Lenders
Major banks in Timmins and other cities in Ontario must follow a strict, tedious loan approval process. This poses a challenge for property sellers needing urgent funds to finalize purchases and cannot expedite mortgage approval through banks. This is where private lenders are particularly useful.
Private lenders may help as they can move things much faster. For major emergencies, private lenders can approve loans within 24 hours and disburse funds in just one week. Rapid financing is important due to situations like foreclosure or power of sale that incur large legal fees. Our network of private mortgage lenders in Timmins also serves Sudbury, Thunder Bay, and Sault Ste. Marie in Ontario.
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%.
How to Find Private Mortgage Lenders in Timmins, Ontario
In Timmins and the surrounding regions, the average price of a home sold in April 2024 was $301,916, a stunning 16.3% increase from April 2023.
Finding a lender isn’t easy if you’re exploring lending options or seeking a private mortgage for your dream home in Timmins. Most private lenders are not household names and rarely advertise to the public.
Private Lenders in Your Area
To find local private lenders, search ‘private lenders in Timmins’ or ‘private mortgage Timmins’ on Google. These searches will help you quickly find private lenders. You can then review several lenders’ websites to learn about their services and make an informed decision. A reputable private lender will have years, if not decades, of experience in Ontario’s real estate market and provide details about their services in Timmins.