Mortgages by Niels

Private Mortgage Lenders Bolton

Secure that hard to get financing through home equity or private lending, for a short term solution to a long term financial goal, or for someone new to Canada. Private mortgage lenders in Bolton can provide a solution, where institutional lenders are strict, and often do not allow for a route to financial health or growth. Short term loans are possible based on the condition and equity of your property. Our team has access to a vast network of private lenders that have different loan to value ratio tolerance and rates.

    Is it better to go with a private lender or bank for mortgage?

    When it comes to funding a real estate transaction there are the two most common ways that is through an institutional lender know as banks.

    In Ontario you have top six banks and mono lenders know as your non-bank type of lenders.

    The other option is a private lender.

    To understand which is better for you, it is important to understand some difference between the two. While each provides funds, banks typically have lower fees and require more documentation to qualify for your mortgage.

    Private lender fees are typically higher, they’re more flexible when it comes to qualifying and tend to be more responsive.

    Banks are in the business of taking funds from depositors, paying them a very low interest rate and lending money out to borrowers at a slightly higher rate, thus creating their income.

    With private lenders they’re generally funded by investors, businesses, or mortgage investment corporation.

    Private lenders are in the business of taking private lenders funds and making private business loans with those funds. The investors expect decent returns and the money they provide tend to be a higher risk of investment for those who do not qualify with a bank. Hence the higher fees and interest rates private lenders charge compared to the banks.

    Can I borrow money from private lenders?

    If you’re wondering if a private mortgage lender is the right fit for you and if you can qualify to borrow money from this source.

    There are a few things to have a look at, if your credit score is fair a score of 600 or lower. Alternative lenders aka ‘B lenders’ will require a minimum score of 600 and higher for CMCH (Canada Mortgage and House Corporation) insured mortgages.

    For those who are new immigrants to Canada, will have to start from scratch building a credit and employment history. Some lenders may provide exceptions or ask for higher down payments starting at 35% down.

    For the self-employed there are challenges such as a steady income, based on commissions, tips, or short term contracted work and when the banks often require a 2 year minimum of employment history to prove steady income, private lenders do not require a 2 year minimum and are more flexible with your self-employed income.

    For foreign income there are also difficulties qualifying for a mortgage with the bank especially if the source is not easy recognizable and down payments can be required to be from 35 to 50%, this is not the case with private lenders.

    What is private mortgage lending?

    For those who are new to the private mortgage lenders option, it is an option that provides solutions where banks cannot.

    Banks are typically know to be harder to work with. They have stricter guidelines on being able to qualify an application when it comes to your debt to income ratio, credit scores, and history of employment.

    Private mortgage lenders will consider your overall situation to be mindful of how will you be able to exit the loan, and there are other factors that are considered to fund your mortgage.

    One of those factors is your loan to value ratio, this is determined by the approximate property value and down payment or mortgage(s) that are currently charged on the property.

    Another factor is the state of your property and the re sale value that your property possesses. In addition, banks are driven by the data and ratio within their programs, with private lenders it is more of ‘common sense’ approach based on the clients and properties overall picture.

    Is private mortgage lending safe?

    To answer this in two steps we will first start with answering the risks that are a concern to lend from a private investor.

    When you’re entering a mortgage agreement that comes in contract, you will have your own legal representation that will be representing you the borrower and the lender will have their legal representation that drafts the agreement for you and your legal representation to review and agree to enter before funding is complete.

    For the second part is it safe for the borrower, this is a were the broker who you work with will be crucial to advise and guide you.

    The question that is important to ask is how will you be able to exit the loan you’re entering. Will the loan allow you to benefit short term and create a plan for your long term financial goals.

    It is not in your best interest financially to enter a private mortgage long term based on the fees and interest rates. It is designed to support you short term and not long term.

    Can private mortgage lenders get me back on track?

    Private lending can often bridge the gap for those who are in temporary financial difficulty. The short-term nature of the loans, which typically are 1 year terms, which can be enough time for some borrowers to find themselves recover from situations like a divorce, sudden loss of work, or an unexpected large expense.

    For those who are looking to consolidate their debts, often a private mortgage loan will be at a lower rate, lower monthly payments, and options like pre-paid payments to give you the exact breathing room you need to bounce back.

    When the term is complete and you find yourself in a position that you can qualify for an alternative or institutional lender you can refinance and look to put yourself into a lower interest rate product, all while you took the year to recover your credit score.

    Are there other options to consider a Private Mortgage Loan?

    Private mortgage loans can also act as bridge loans when you’re in need of a down payment for your new home before selling your current home.

    Furthermore, if you’re interested in upgrading your home before selling a short-term private mortgage is often a great fit and worth the investment. With open terms options you can also pay off your private mortgage loan without penalties.

    Unserviced Land LTV%
    LTV = Loan to Value 50%
    Serviced Land LTV%
    LTV = Loan to Value 65%
    Most Private Lenders Max LTV%
    LTV = Loan to Value 80%
    Most Major Cities and Suburbs Max LTV%
    LTV = Loan to Value 85%
    Some Lenders Max LTV%
    LTV = Loan to Value 95%
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