There are many reasons why residents have chosen to call Woodstock home. With beautifully preserved Victorian architecture in the city center and beautiful natural surroundings, the city retains a small-town feel that attracts many. Situated in Southwestern Ontario and at the head of the Thames River, Woodstock is only 128 km from bustling downtown Toronto. The population as of the 2016 consensus is 40,902.
Real estate statistics for 2020 and the first quarter of 2021 have been nothing less than impressive. The price of an average single detached property in Woodstock now stands at 450,000 dollars. This is reflective of a 28.4% increase in the first quarter of 2021 alone. The time to sell a property in the region of Woodstock is only 13 days on the market in May 2021.
Depending on the specific financial picture of an individual homeowner/borrower, there are plenty of lending options in the Woodstock area. What if you have damaged credit? In addition to other well-established lenders, there are experienced private lenders available for a Woodstock borrower/homeowner with poor credit.
What Types of Private Mortgage Loan Options are Available for the Woodstock Borrower/Homeowner?
Poor credit will not be a barrier to obtaining private secured mortgage financing. Although the banks and credit union/trust companies may turn away a borrower with a high debt ratio and/or bad credit, private lenders will be able to evaluate other criteria to approve mortgage financing. There are three primary areas that a private lender will focus on when determining mortgage loan eligibility:
- The Loan-To-Value (LTV) by assessing a recent appraisal of your property
- The overall debt ratio of a homeowner/borrower and any existing assets
- The degree of equity that exists in your home. Generally, a private lender will prefer to see at least 25% equity built in your home.
Based on these criteria private lenders will be able to provide different mortgage loan options depending on the specific needs of the homeowner/borrower. All second mortgage private loan options utilize existing home equity, and the home is used as the leverage for mortgage financing.
Private lenders will rely heavily on a recent appraisal when determining what type of financing they will be lending. For a first mortgage (principal mortgage) sufficient downpayment will be factored in as well as any additional assets a borrower may have. Different private mortgage loans include:
- Home renovation loans
- Bridge financing
- Negotiating new terms on your principal loan
- Debt consolidation loans
- Home Equity Line of Credit (HELOC)
- Home Equity Loan
How Are Private Loans Structured?
Mortgage financing regardless of which lender is negotiating terms will structure the terms of the loan differently. The overall mortgage loan structure depends primarily on the criteria that are needed to approve mortgage loan financing.
Generally, banks will not be lending funds on a short-term basis and it may take some time to process the mortgage loan. The terms differ with a private secured mortgage loan. With a private mortgage loan, the structure tends to be:
- Short term in length– Most private mortgage loans will be between 1 to 3 years in length. Providing funds for immediate financial concerns while giving them time to potentially increase the applicant’s credit score if the loan is paid in full and on time through the course of the loan.
- Processed fairly quickly– Compared to their bank counterparts, Private lenders will be able to process mortgage loans in a faster timeframe
- Higher interest rates-The banks will be able to offer very competitive interest rates because the loans are considered lower risk. Private lenders will be charging higher interest rates to mitigate the risk associated with loans with poor credit.
- Higher fees- By extension, the fees charged by private lenders will be higher too.
Interest rates associated with private secured mortgage loans fall between 7% to 12%. Any fees associated with private mortgage financing will generally fall between 3% to 6% depending on the financial picture of the homeowner/borrower.
What Steps Can Be Taken Before Applying for a Private Mortgage Loan?
It is always better to be well prepared when approaching any lender. Paperwork and documents that can demonstrate some of the criteria that lenders will be demanding will provide for a seamless and faster processing time.
- Bring a recent appraisal and proof of the degree of equity in your home if you are a current homeowner and looking to secure a second mortgage loan option
- Gather all relevant paperwork.
- Consider a pre-approval if you are applying for a principal mortgage.
- Be very familiar with your credit score and credit report.
- Research private lending options in your area.
- Arrange to sit down with a private lender.
- Know what type of loan you feel would address your short-term financial needs.
Mortgage Broker Store Can Direct you towards Suitable Woodstock-based Private Mortgage Options
At Mortgage Broker Store we have access to a network of established private lenders in Woodstock and the surrounding area We can determine the type of mortgage financing that will suit your financial objectives. We will be able to point you in the direction of a private lender to help negotiate terms on a secure mortgage loan option. Poor credit does not have to stand in the way of securing mortgage loans. Whether you are seeking a first mortgage to purchase a home or would like to tap into the existing equity in your home, private lending options are available to help make these mortgage goals achievable.