Although borrowers often approach the big banks for mortgage loans and various types of financing needs, it is very important to be cognizant of other very viable lending options that are available for the Saskatchewan-based borrower. Financing and loan options may be open to you despite drawbacks to your loan applications that may have led to the banks turning down your loan request, namely credit issues.
Mortgage Broker Store is well established in Saskatchewan and we understand the unique challenges facing borrowers today. Perhaps you have experienced a hit to your credit score (beacon score) due to unforeseen circumstances. Credit reports are relied heavily upon by the banks and unfortunately, these credit reports are only a snapshot of your overall credit history and may not be representative of your overall creditworthiness.
What Categories of Lenders are Available?
That being said, the banks will use your credit as the main criteria when assessing loan and financing eligibility. There are three types of lenders in Manitoba including the banks:
- A Lenders– The banks, or referred generally to as traditional lenders, represent the A lender category of lenders. Typically banks supply long-term amortized first loans and are able to offer interest rates the average 2%. Banks will be able to charge next to no fees because loans are based on exemplary credit.
- B Lenders- B Lenders consist of Trust Companies and Credit Unions. When the banks may require a credit score of above 700, B Lenders will accept credit scores of 600 and above on a credit spread of 300 to 900. B Lenders will usually require a salaried employee to qualify, as opposed to self-employed or contract borrowers. Interest rates on loans provided by B Lenders tend to be 4% to 7% and there are usually fees of approximately ½% attached to these negotiated mortgages.
- C Lenders– Private lenders fall into this category. Loans offered by private lenders will generally be based on more flexible terms and tend to be shorter in length than those offered by the banks. Those with poor credit can qualify for loans offered by individual private lenders, private lending syndicates, as well as Mortgage Investment Corporations (MICs), which are pooled mortgage funds. Interest rates will be higher than those offered by A and B Lenders averaging around 7% to 12% depending on the type of loan and particularities of the mortgage loan application. Combined lender and broker fees usually range from 3% to 6%.
Key Advantages Associated with Private Loans for the Saskatchewan Based Borrower
- Shorter-term length and flexibility-The interest rates associated with privately negotiated mortgage and other short-term loans will be higher than banks charge, however, the ease of processing and flexibility these loans offer, can often offset the additional costs. These loans have typical term lengths of 6 months to 36 months and usually require only interest payments during the course of the loan with no need to pay off the principal loan amount. This represents an attractive financing option for some borrowers who may need this loan for quick home renovations or a short-term loan to consolidate debts for example.
- Available for self-employed and/contract employees-Private loans are also very appealing for borrowers who may be self-employed or rely on income from different sources. While big banks will require the last 3 years of Notice of Assessments (NOAs) to prove yearly income, private lenders will look at all available income streams including investment income, all assets, self-employed earnings, monthly spousal and child support payments, and even monthly child tax credit.
- Less reliance on credit scores– Hurdles that may have been in place when applying for mortgage loans through the banks will be far less of an issue when approaching a private lender. Private lenders will base loan acceptance on broader criteria including all salary sources, appraisals on existing properties, bigger down payments, and any listed assets.
How Long Should You Expect the Approval by our Private Lenders to Take
When applying with a private lender, the overall application process is generally far simpler than when applying through a bank for financing. It is also a quick process that is generally measured in days, rather than weeks when typically applying through A Lenders. Private lenders will require specific information from the borrower which generally includes the existing equity built up in your property that will help determine the overall level of risk for any particular loan. It is best to also come to your appointment armed with:
- Any recent Notice of Assessments-as reference for the private lender to help in the overall determination of available income sources.
- Your current credit report– although not as reliant on credit as the A and B lenders, credit history is still included in the application process.
- Proof of property taxes- Bring with you your most recent property tax bill.
- Any mortgage recent mortgage statements that you have– These statements can include any 1st, 2nd, or 3rd mortgage statements if you are applying for additional mortgages on your existing property
- Any proof of investment income- investment income will be included in the overall assessment of yearly sources of income.
- List of existing assets– estimation of assets will come to play in the overall determination of loan eligibility.
Our General Approach to Private Mortgage Lending In Saskatchewan
At Mortgage Broker Store, we take into consideration the unique aspects pertaining to private lending that may vary from Province to Province. Saskatchewan offers properties that are attractive for private lenders to leverage loans against.
Like any Province, the location of these properties will be weighed heavily when determining the overall risk on any private mortgage loan. Properties in Saskatchewan encompass both rural and urban locations. Each property will be assessed using available property appraisals.
We will be able to negotiate private loans based on your specific needs with:
- Interest-only mortgage options
- Open mortgages
- Will not require a minimum Beacon Score
- Plenty of short term financing options available to suit your needs
Let Mortgage Broker Store Help You Achieve Your Financing Goals- A list of Private Lenders in Your Areahttps://mortgagebrokerstore.com/saskatchewan-regina-mortgage-broker
Mortgage Broker Store understands the needs of the borrower and we are always striving towards finding the best match when looking at your particular mortgage and financing needs. We work with a network of private lenders across the country and are more than happy to guide you in important decisions that you will be making during the private lending process.