Using the equity in your home is a fast and effective way to access cash when you need it. The Mortgage Broker Store has been helping connect borrowers with loan options for more than 12 years. We cover one of the largest areas in British Columbia covering Vancouver and area, Vancouver Island, Thompson/Okanagan, Northeast, North Coast, Kootenay, and Cariboo.
A mortgage loan can be used for a number of reasons and are often a good solution in cases where a bank would otherwise not say yes or the borrower has poor credit. Reasons for a private loan may 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
Private lenders offer short term secured loans to help cover the cost of an unexpected expense or debt consolidation. Terms are usually 1 to 3 years and with a higher interest rate than traditional bank loans. Most mortgage rates will run from 7% to 12% depending on the eligibility factors. The combined lender and broker fee will be 3% to 6% depending on the complexity of the mortgage request.
When budgeting for your private loan, it is important to also take into consideration other fees such as:
- Legal Fees
- Land Transfer Taxes
- Real Estate Fees
- Broker and Lending Fees
- Private Mortgage Insurance
What Is The Difference Between Different Types of Lenders?
There are several options available depending on the type of loan you are looking for and your financial situation. C Lenders offer the most flexibility and quickest approval time for loans.
Lenders are divided up into 3 categories:
- A Lenders This category includes banks and Monoline lenders who are bank-like lenders that only do mortgages. They have strict requirements and can provide 2% rate mortgages with almost no fees.
- B Lenders – These lenders are Trust Companies and Credit Unions with rates that are rates are usually 4% to 6% with 1/2% in fees.
- C Lenders – This category is where private mortgage lenders come in and include (MICs, individuals, and syndicates) that charge 7-12% and 3-6% in fees.
C lenders can also provide more loan options to help you get your financial situation back on track.
Private First and Second Mortgages – A first mortgage puts a first lien position on the property that is secured by the mortgage. Private mortgages are ideal for people who want to borrow money for immediate expenses and not be saddled with a long-term loan. A second mortgage or second lien on the property is an excellent option for consolidating debt, funding home renovations or acting as a bridge loan.
Home Equity Loans – A home equity loan is a kind of loan secured by a piece of real estate. These loans are usually given as registered mortgages on a property and approval is based on the equity in the property. Equity is the value of a home minus the debts on it. Home equity loans are different from bank loans, which are approved based on credit score.
Debt Consolidation Loans – Debt consolidation is the process of refinancing a person’s debt by using one large loan to pay off many small loans. Typically, is done to get a lower overall interest rate, to reduce other miscellaneous fees associated with the individual debts, and for the convenience of making a single payment instead of many payments.
How Much You Can Be Approved For?
Depending on your financial situation, private lenders in BC will lend up to 70% with an interest rate of 7.95% on a first mortgage and at a rate of 10.95% on loans up to 70% on second mortgages.
Private lenders will start by looking at the equity value of your home using the Loan to Value (LTV) ratio. This determines whether the property is a worthwhile investment.
To calculate a property’s LTV you divide the value of the existing mortgages by the market value of the house. To give an example, a house with a market value of $1,000,000 and $800,000 in existing mortgages will have an LTV of 80%. Most private money lenders in Ontario will not invest in residential properties with an LTV of greater than 80%.
Private lenders require the homeowner to have at least 20% equity in the home. The more equity you have, the greater chance of being approved.
How Long Does It Take To Get Approved By Our Private Mortgage Lenders?
The application process with a private mortgage lender is much simpler and quicker than with a traditional bank.
A private lender will ask for several pieces of information to help determine the loan risk. They will need to know the equity level you have in your property as well as other important factors such as:
- Credit Score
- 1st Mortgage Statement
- 2nd Mortgage Statement
- Proof of Property Taxes
Approval usually happens within a few days based once a review of your current financial situation is complete.
Our Unique Approach to Private Mortgage Lending in BC
British Columbia presents many unique opportunities for individuals seeking loans. The Mortgage Broker Store works closely with borrowers to help them gain access to the funds they need.
- No Income Verification
- No Minimum Beacon Score
- Open mortgages available
- Interest-only payments
- Financing for former grow-ops if the property has fully remediated status.
Visit our Mortgage Calculator Tool Section for more information:
Contact us today to learn more about your private mortgage options.