Toronto Private Lender Mortgages
A private lender mortgage is a loan which is secured against real estate and is not provided by a large financial institution. Private lenders are typically companies or individuals who have decided to invest their personal money in real estate. Toronto private lender can provide Many private lenders prefer to invest in Toronto properties because of the high price growth and the ability to quickly sell properties via power of sale if the borrower stops paying their fees.
Private lenders can provide mortgages amounts from $20,000 to $700,000+. Typically the interest rates range from 7%-15% depending on the value of existing mortgages, the condition of the property, income, credit score and other factors. Since private lenders are not eligible for government provided mortgage insurance many charge an initial lender fee to compensate for the risk associated with private mortgages. Other fees that are typically charged are from home appraisers, mortgage brokers, and real estate lawyers.
Private lenders in Toronto have certain conditions that must be met before they will provide a mortgage. The first and most important condition is the loan to value ratio. Most private mortgages are for owner-occupied homes. Private lenders want a loan to value ratio below 85% on most homes. For commercial investments private lenders want a loan to value ratio below 65%.
Private lenders in Toronto want the loan to value ratio below 75% for rental income properties. Rental income properties must show a strong cash flow to support the mortgage payments.
Private lenders in Toronto will also look at your credit rating. You will not be turned down for a loan just because you have a bad credit rating. A high credit rating can result in a low-interest mortgage. A poor credit rating can result in a higher interest rate mortgage.
Reasons to Get a Private Lender Mortgage
Private lenders can provide money for many different personal or business reasons. The lender will want to know what the money will be used for and can you service the mortgage. Some common reasons people opt to get a mortgage from a private lender includes:
- Self-employed or retired and not able to get bank loans
- Sickness or disability that causes an inability to work
- Pay off other high-interest debts
- Renovate or repair a property
- Recent job lay off
- Need to have the money very quickly
Private lenders are a common option for people who don’t qualify at banks. Typically loans from private lenders are more expensive than bank loans and are recommended as a short term solution. We specialize in providing short-term loans from private lenders and can help you qualify for a lower interest rate at a bank after the private mortgage is finished.
There are many different mortgage companies in Toronto to choose from. As a borrower you should look for the best Toronto mortgage broker for your needs.
Toronto in recent years has been seeing rapid gains in house prices created by a high demand by consumers and investors alike. The real estate market has one of the highest growth rates in Canada, with house prices and sales increases of over 20% from 2015 to 2016.
Due to city regulations which promote the building on condominium builders, most new homes are condo units. There is a huge unmet demand for semi-detached and detached homes in the city, with detached homes in Toronto selling for an average of $1.2 million as of Sept 7, 2016.