As one of Canada’s most livable cities with a fast-growing population, Vaughan’s real estate market has been experiencing a boom throughout the past decade. In August 2022, the average price for a home in Vaughan Ontario reached $1.27 million, a significant increase of 95% from August 2012 according to the Toronto Regional Real Estate Broad (TREBB).
With the value of homes at some of the highest levels ever, homeowners in the city can tap into their growing home equity with the help of a bank or a private mortgage lender in Vaughan.
Due to the strict nature of bank lending requirements, getting a bank mortgage can be very difficult. For people who have been turned down by banks, using a private mortgage lender in Vaughan is a viable alternative to get the funds they need.
Vaughan private lenders are also not affected by legislation that targets other lending institutions like banks and credit unions. This is a key advantage, especially since Oct 17, 2016, when the federal government implemented new lending rules requiring bank borrowers to qualify at higher interest rates. Private lenders have more relaxed rules for lending and can lend money when banks won’t.
What Are Private Lenders?
Private lenders are individuals or companies that lend money for profit. Since Vaughan is an up-and-coming city with a growing population and strong economy, private lenders are willing to lend money to borrowers in the region. Private lenders in Vaughan can provide loans worth millions for many years, or loans as small as $20,000 for one-year terms.
These lenders will provide funds in exchange for equity, usually a home, but also cars, plots of loans and other assets of high value. Securing loans with property reduces the risk of default, as the property can be sold to recoup any losses.
Private Lender Mortgage Requirements
People who turn to private lenders typically have been turned away from the major banks, as they have strict income and credit score requirements that need to be met in order to be even considered for financing.
Private lenders do not penalize borrowers with a low credit score, to them the most important considerations are the home’s price and the value of any existing debts attached to the property. Private lenders use the Loan to Value Ratio (LTV) to approve loans. The LTV of a property is equal to any debts attached to it subtracted from the estimated selling price. For example, if a property is worth $1,000,000 and has a mortgage totaling $650,000 then the current LTV of the property is 65%. For properties in Vaughan and across Ontario, the maximum LTV a private lender will go up to is 75%.
Private lenders will charge interest rates ranging from 7% to 14%. While credit score is not a deciding factor in whether you can get a private loan, it does influence the interest rate charged, with the lower the credit score the higher the rate of interest.
When a private loan is finalized, the lender will also charge administration fees worth 3% to 6%. These fees will go towards paying the staff to create the loan agreement and all the other legal paperwork needed.
Common Reasons for Needing a Private Mortgage
Before a private lender provides financing, they will request the reason why the financing is needed. There are many valid reasons for needing private lender financing. Some of the most common reasons are:
- Paying off high-interest debts
- Making property repairs
- Renovations
- Loss of employment
- Stopping Power of Sale or Foreclosure
- Getting additional education
Many will turn to private lenders for debt consolidation loans. These loans can be large enough to pay off all the borrowers’ debts and replace them with an easy-to-manage loan that has a much lower interest rate than credit cards. This private loan helps borrowers eliminate their debt and save money from reduced interest charges.
Fast Private Mortgage Loans
All of Canada’s major banks have a lengthy and in-depth mortgage approval process that can take months to complete. These institutions have no way to speed up their processes, which can cause issues if a real estate deal is very time-sensitive. Some real estate transactions can be at risk of falling apart if financing isn’t quickly provided, and in this scenario, a private lender would be more suitable.
Private lenders can work with extremely strict deadlines and provide financing much faster, sometimes finalizing loan agreements only 1 week after starting the loan application process. This can make them particularly useful for borrowers who need to quick access to funds.
Why Private Lenders Invest in Vaughan Real Estate
Home of Canada’s first hospital with smart technology, with plenty of green space, large homes, low crime, a booming industrial sector and over 19,000 businesses in the city, it’s no surprise that Vaughan has become a sight-after destination for immigrants and those looking to start a family. Vaughan’s population grew by 5.5% from 2016 to 2021, surpassing 400,000 in 2022 with no signs of slowing down.
Many people choose to live in Canada’s 17th biggest city due to the availability of jobs and its proximity to Toronto. This has helped fuel demand for housing, creating a red-hot real estate market. This boom is not limited to Vaughan alone. Neighbouring communities like Kleinburg and West Woodbridge have also experienced fast-growing real estate markets during the same time period. In Kleinburg, home prices grew from $949,000 to 1.8 million from August 2012 to 2022, while West Woodbridge home values jumped from $435,000 in 2012 to $1.1 million in August 2022.
If you own a home in Vaughan or surrounding communities, you can work with private mortgage lenders to take advantage of your home’s growing equity and tap into your accrued wealth. Whether you want a second mortgage to purchase a second home, a home equity loan to consolidate debt or even just some cash for a vacation, there are private lenders in Vaughan who can work with you.
How to Find Private Mortgage Lenders in Vaughan Ontario
Private lenders usually don’t advertise to the general public, and most people don’t hear about them except through word of mouth or through research. One quick way to find private lenders is to search on Google for terms like ‘private mortgage lenders Vaughan’ or ‘private mortgage lenders in Ontario’ to find different lenders you could work with.
Another way you could find private lenders in Vaughan is by working with an experienced broker like the team at Mortgage Broker Store. As a mortgage broker working in Ontario’s real estate industry for over a decade, we have built professional relationships and acquired a vast network of private lenders across Ontario. A network that we can tap into to help you find the lenders who can provide the loan you need at the most advantageous deal possible. We are also a direct private lender ourselves, so we can also provide you with financing options if there isn’t a better deal available.
If you want to explore your options and find private mortgage lenders in Vaughan who can work with you to achieve your financial goals, call us at (416) 499-2122 or fill out a form on this website for a FREE real estate consultation. We will work with you to understand your unique financial situation, browse our network of lenders, and negotiate with them on your behalf to get the best deal. We can also develop a long-term plan to ensure that your credit score improves over time, making you eligible for cheaper financing options in the future. Our goal is to keep you informed of all the lending options available to you so you can make the best decision for your unique needs.