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 loans they want.
How Private Mortgage Lenders Work in Timmins
Private mortgage lenders in Timmins provide 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.
How to Find Private Mortgage Lenders in Timmins, Ontario
During the early 2020s pandemic, Ontario’s real estate markets surged in value, making communities like Timmins attractive to investors and private lenders.
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.
Approval Criteria for Private Lender Mortgages
Private lenders, though more flexible than banks, still have specific requirements that borrowers must fulfill to secure financing. These requirements typically include assessing the Loan-to-Value (LTV) ratio.
Loan-to-Value (LTV) Ratio
Private mortgage lenders will determine the Loan-to-Value (LTV) ratio of the private mortgage application. The LTV 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. Lending above a 75% loan-to-value ratio is risky, potentially resulting in losses even after a power of sale. Private lenders may prioritize credit scores but tend to avoid properties burdened with substantial existing debts.
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.
- Introduction
- How Private Mortgage Lenders Work in Timmins
- Private Mortgage Services in Timmins, Ontario
- Reasons for Needing a Private Mortgage
- Quick Funds from Private Lenders
- How to Find Private Mortgage Lenders in Timmins, Ontario
- Approval Criteria for Private Lender Mortgages
- Loan-to-Value (LTV) Ratio
- Private Lenders in Your Area