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. Most ordinary people will not get approved for a mortgage from a bank. In Timmins, those who could not get the financing they need from banks can turn to another option, private mortgage lenders.
Private lenders are not subject to the same regulations as banks, credit unions, trust companies and other types of lenders in Timmins. They often work with individuals who are rejected by these lenders.
Banks will require a borrower to have a very high credit score just 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 a borrower’s credit score 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 who is seeking additional funds can look for a private lender to get the loans they want.
How Private Mortgage Lenders Work in Timmins
Timmins private mortgage lenders loan out the money in the form of registered mortgages 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 and this process usually takes 4-6 months.
Private mortgage lenders can provide mortgages to purchase homes of any size or type. Private lenders can provide a greater range of mortgage solutions for borrowers than banks. They can offer multi-year mortgage terms for hundreds of thousands of dollars, or offer loans as low as $30,000 and loan terms as short as one year.
A borrower can negotiate a longer repayment period if they would like to repay loans in small, more affordable instalments. When considering what kind of interest rates and fees would be charged, a general rule of thumb is that the riskier the mortgage the higher interest rates and fees to be charged.
Private mortgage fees are required to be paid upfront, as they are used by the lender to pay their staff, real estate lawyers, home appraisers, and anyone else who is involved in arranging the mortgage. Private lenders rely on real estate to generate income and are drawn to Timmins, Ontario as homes in the region have high appreciation rates.
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:
- 1st, Second and Third Mortgages
- Home Equity Loans
- Home Equity Lines of Credit
- Loans to Consolidate Debt
- Bridge Loans
Approval Criteria for Private Lender Mortgages
While private lenders are easier to work with compared to banks and other financial institutions, they do have some requirements that borrowers need to meet. They are more concerned about the market value of a property compared to the total value of any debts or liens on it when considering mortgage applications.
Banks use credit scores, income history, declared sources of income, as well as a host of other factors to inform their decisions. These things are not usually considered by private lenders in Timmins.
Private mortgage lenders will determine the loan-to-value (LTV) ratio of the private mortgage application. The loan to value (LTV) ratio is calculated by dividing the total debts by the appraised value of a property. If a house in Timmins is worth $1,000,000 and the borrower wants to get a mortgage for $700,000, the LTV would be 70%.
In that example, the LTV for that mortgage applicant is low enough to get approved. Most private mortgage lenders will approve loans up to a maximum of 75% LTV of a residential property. Loaning to LTV that is higher than 75% is dangerous as it might lead to losses even after a power of sale. Private lenders may care a lot about someone’s credit score but they will avoid lending to properties with large debts attached to them.
Reasons for Needing a Private Mortgage
While applying for a private mortgage an explanation will be needed for why you need the loan. Private lenders are lenient compared to banks and accept many reasonable answers. The popular reasons include:
- To pay off high-interest debts
- To fund home renovations or repairs
- For living expenses after losing a job
- To stop a power of sale or foreclosure
- To pay tuition fees for university or college
Another group that frequently works with private mortgage lenders are individuals who cannot get loans from banks and other lending institutions like 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 is a problem for many people involved in property sales who urgently need funds to complete the purchase, but have no way to speed up the mortgage approval and creation process with their bank. This is where private lenders are particularly useful.
Private lenders may help as they can move things much faster. If it is a major emergency, a private lender can approve loans within 24 hours and provide the funds in 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 services other cities and towns in Ontario, including Sudbury, Thunder Bay and Sault Ste Marie.
How to Find Private Mortgage Lenders in Timmins Ontario
Across Ontario, real estate markets experienced a major surge in value throughout the pandemic of the early 2020s making communities like Timmins perfect for real estate investors, including private lenders.
In Timmins and the surrounding regions, the average price of a home sold in June 2022 was $277,231, a stunning 21% increase from June 2021. Timmins set a new record in June 2022 when the value of all home sales surpassed $50 million, the highest ever recorded in the region.
If you are looking to explore your lending options, or want to get a private mortgage to buy the house or condo of your dreams in Timmins, you may find that finding a private lender is not so easy. Most private lenders are not household names and they rarely advertise to the public.
One way to find private lenders in your area is to enter a search on Google like ‘private lenders in Timmins’ or ‘private mortgage Timmins’. These online searches will help you quickly find private lenders. You can then look at several private lenders’ websites to learn about them and help you make a decision. A reputable private lender will have years, if not decades, of experience in Ontario’s real estate market. They should have some information about the services they offer in Timmins and what you can expect when trying to get a private mortgage in the region.
Not everyone has the time or patience to sift through different private lenders, comparing their websites and any rates they list. Instead of going through this tedious process, you can call the mortgage professionals at Mortgage Broker Store at (416) 499-2122 or fill out a form on this website. We will provide a free consultation to understand your needs and find private mortgage lenders in Timmins who can work with you. With their help, you can quickly get the financing you need to get a mortgage and buy your dream home or tap into your current home’s existing home equity for fast cash.