Like a lot of other areas in southern Ontario, Windsor’s most recent real estate numbers present an interesting picture. As of July, 2022, the average sale price was $557,989. That represents a bump of 2.10% over July 2021. However, there were only 393 property sold. That number represents a drop of 40.99% from the previous month in 2021.
Have the banks turned you down for a second mortgage or loan in Windsor? Banks are strictly regulated by governments and private lenders are not. A private mortgage lender in Windsor can help you get a loan after you’ve been turned down. We’ll look at your total financial situation to assess if private mortgages fit your needs.
Many private loans are short-term. Typically approved ones last from 1 to 3 years.
There are a few other things you should know. For example, private loans are negotiated quickly. Banks apply stress tests and they demand higher credit scores. According to TransUnion, your score needs to be above 600 to be approved for a conventional loan.
Private loans also cut down on processing times. One of these mortgages can be approved in just one or two days.
What is a Private Lender Mortgage?
Private lenders supply the money in the form of a home equity loan, private second mortgage, debt consolidation loan or even a home equity line of credit (HELOC)
Most private mortgage lenders in Windsor work in specific geographic areas. Private mortgage loans can start from as little as $30,000.00. The term is often one year or longer .
Like a bank, a private mortgage company registers the loan against your property. Approval is based on the equity and value of the property being put up as collateral. The loan is not based on your credit score. Most private mortgage lenders in Windsor have a maximum loan-to-value ratio (LTV) of 75%.
Second Mortgages
Like the name suggests, second mortgages are placed behind the first mortgage. Most of these are equity-based and don’t focus exclusively your credit score. The maximum loan-to-value ratio is usually about 75% in the Windsor area. These numbers also apply to LaSalle, Tecumseh, Kingsville and Essex.
Private lenders are a common source of funding for second mortgages. Most private lenders like to inspect the property before approving the loan.
Potential Reasons for Needing a Private Lender Mortgage
Private lenders want to know why you need the financing. Most reasonable answers are acceptable. Like the following:
- To pay off high-interest debts.
- To work on renovations.
- To have money after losing a job or other income source.
- To stop a power of sale or foreclosure.
- To pay for children’s education.
Private lenders in Windsor help people who don’t qualify at banks. What is a good interest rate for a private loan?
People with damaged credit look for these private loans. Your credit worthiness dictates what you get approved for. For example, A lenders like banks and credit unions or B lenders offer lower rates to applicants with good scores.
However, those with damaged credit need to look at alternative options.
That’s where private lenders come in. These professionals can offer short-term mortgage financing to look after critical financial needs. Even if an Ontario homeowner has credit issues, a private mortgage can help them tap into their equity.
So the question remains, “What is a good interest rate for a private loan?”
The answer is interest rates on these types of mortgage products can range. They range from below 7% all the way up to the high end at 12%. Of course, individual financial portfolios make a difference.
There are some other criteria affecting a final rate.
- Equity. Private lending institutions look at the amount of equity you’ve built up in your home or property. These experts usually require about 25% existing equity before proceeding with a private loan.
- Income. Different income types usually aren’t a barrier. Banks usually prefer full-time salary-based money. Private lenders are different. They look other sources of income including investments, contract work, and self-employed income.
- Additional Assets. Private lenders look at additional assets before calculating a home mortgage loan amount.
The Loan to Value (LTV) is one of the biggest metrics used to calculate the interest rates on a private loan. This is one of the big criteria used by these alternative lending sources. Private lenders require a recent appraisal of your property to arrive at this value.
The loan amount they will offer you is in relation to the appraisal you get. Usually, private lenders will offer you up to 75% of this LTV.
Overview of Lenders in Windsor’s Real Estate Market
Windsor is a city located in the south part of Ontario and right beside Detroit, Michigan. Windsor is known as one of the hubs of Canada’s automotive industry. Windsor’s housing market is experiencing what’s being called a slight correction as of June 2022. The region is one of the most affordable regions in Ontario. The high price gains and high demand for housing is what attracts investors to the Windsor real estate market. The employment rate is on an upward trend and overall economic outlook has been favourable. These factors and more makes investing in Windsor properties an attractive proposition for private mortgage lenders.
Overall, Windsor is seeing a decline in home sales as of June 2022. Recent statistics from the Windsor-Essex County Association of Realtors report a decline of 21.2% from June of 2021. The number of units sold for June of this year was 636.
There are some other interesting statistics. For example, over the first six months of this year, home sales in Windsor total 3826 units. That represents a decline of 7.5% from the first six months of the previous year.
The news for the first six months of 2022 isn’t all bad. The average price for all of the homes sold in the area for June 2022 equaled $600.606 dollars. That represents a jump of 10.3% from the same month of 2021.
There was some good news for home sales in the region. For example, the number of new listings jumped by 36.4% from June of last year.
At the same time, the dollar value of all of the homes that were sold last month in the area was $382 million. That was a huge reduction from the same month in 2021 representing a 13.1% drop.