The government has placed strict rules on Canadian banks, but this has turned away many people who would rather get mortgage loans from private lenders. Most private mortgage lenders in Whitby exclusively offer hard-to-place mortgages for people turned down by banks. Since they do not have to follow the same rules as banks. By considering the equity in a property, private mortgage lenders in Whitby offer low-income earners and people with low credit scores to access loans. With the money, they can meet financial obligations, including education, home upgrades or emergency medical expenses.A5
Mortgages from Private Lenders
Whitby private lenders mortgage loan money as registered mortgages secured against real estate. This is ideal because the Ontario Mortgage Act allows them to sell a property if the borrower doesn’t honour the agreement. Private lenders in Whitby generally offer mortgage loans for one year (unless you prefer otherwise), and the amount may be as little as $30,000. If it is a riskier second mortgage or the applicant has no income, private lenders will charge higher fees compared to regular bank loans. Private lenders are usually individuals or companies looking to profit from real estate. The Whitby real estate market is particularly attractive, being in Ontario, which boasts some of the highest real estate appreciation rates in Canada.
Reasons for Needing a Private Mortgage
While applying for a private lender mortgage, you will be asked to explain why you need the money. Private lenders are more lenient than banks and tend to accept the most reasonable explanations. Some popular explanations are:
- Paying off high-interest credit card debt
- Covering living expenses after being laid off from work
- Paying tuition fees for college or university
- Funding home repairs and renovations
- Stopping a power of sale or foreclosure
People who couldn’t qualify for low-interest bank loans are the main targets for private lenders. Private lenders in our network can quickly provide mortgages to those who were turned away by banks. This is very useful for stopping power of sales, foreclosure or other urgent financial needs.
Fast Financing from Private Lenders
Major banks in Canada must follow a long, comprehensive process to approve loans, and there is no way to speed things up. This is a major problem, especially when funds are urgently needed. Private lenders do not have to follow the same rules as banks and can offer loans much faster. If need be, it can take only 24 hours to get funding from private lenders. Our network of private lenders can loan to people in every city and town of 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%.
Information on Lenders in the Whitby Real Estate Market
Whitby is in Ontario, one of the most discussed provinces in Canada. This is because the real estate market recently gained by double digits, prompting many people living in different parts of the province to get into private real estate lending as an ideal way of earning extra income. Ontario is a notable economic powerhouse and also one of the best places to live in Canada.
Looking for expert guidance in navigating the world of private mortgage lending in Ontario? Look no further than Mortgage Broker Store. Jonathan Alphonso and our team specialize in connecting clients with the perfect private lender tailored to their needs. Whether you’re seeking a first mortgage, second mortgage, or specialized loan, we’ve got you covered.