Is it Difficult to Get a Loan from a Private Lender?

Private lenders charge higher rates than other lenders, but have lenient approval criteria.

There are times in life when money may be tight. There are also times when homeowners may suffer from poor credit. Any host of reasons can lead to a lowered credit score. A job loss, reduced income, sudden and unexpected expenses that may be hard to cover, or an expensive divorce can all lead to a dip in credit score.

Regardless of the reason that leads to poor credit, Ontario homeowners still have choices. Ontario homeowners can also turn to lenders who may be able to negotiate secured mortgage loans to help ease short-term financial difficulties.

It is not an exaggeration that we have all suffered to some degree or another under a prolonged pandemic. Covid-19 has forced many of us to make changes to our job structures while still trying to keep paying for all housing costs which includes monthly first mortgage payments.

Ironically, despite lowered household income for many during the pandemic, the Ontario housing sector has experienced unprecedented growth. With significant year-over-year property appreciation in all areas of the Province increasing into double-digit territory, real estate has benefited from the economic spinoffs of the Covid-19 pandemic.

According to the Toronto July Housing Report, the average price of a single, detached home has jumped to 1.1 million. With limited inventory on the market, The Ontario Real Estate Association (OREA) reports that July housing inventory is moving very quickly with an average of just 13 days from listing to selling.

Coupled with these encouraging numbers, The Bank of Canada announced recently that the Overnight rate will be staying at the historically low level of 0.25% until early into 2022. This will allow for some lenders to continue to offer discounts to mortgage rates through the next 6 months at least.

How Hard Is It to Get a Loan from a Private Lender?

Just how can Ontario homeowners take advantage of newly acquired housing appreciation when damaged credit is a stumbling block to bank mortgage financing?

The answer lies in the number of well-established and experienced private lenders operating throughout the Province.

Private lenders will not be able to offer the competitive mortgage rates offered currently by the banks, however, a private lender will be able to overlook credit issues as well as reductions in income and still offer private secured mortgage financing. For those Ontario homeowners struggling with damaged credit, the good news is that it is not difficult to obtain private mortgage financing.

Ontario-based private lenders will be able to offer secured private mortgage loans:

Types of Private Mortgage Loans

What Criteria are used to Approve a Private Mortgage Loan?

All private lenders are basing the mortgage calculations by assessing a homeowner’s property which is used to leverage the private mortgage loan. Private lenders will calculate:

What Rates and Fees Do Private Lenders Charge?

Many homeowners are concerned about the fees and mortgage rates that they will have to face when contemplating second mortgage options. For most private lenders it is standard to charge between 7% and 12% depending on the financial circumstances of a particular homeowner.

Fees attached to most private mortgage loans tend to fall between 3% and 6% of the total cost of the loan. A private lender will be determining the associated risks involved in lending out mortgage financing and this will affect both the overall finalized mortgage rates and fees involved.

When arranging a private mortgage loan, it is important to bring with you all the necessary documentation including a recent home appraisal, proof of all sources of income, a list of any financial assets as well as the last two years’ NOA’s. It will help to also be clear in terms of which second mortgage loan would best suit your short-term financial goals.

Mortgage Broker Store Will Help Direct You Towards Private Mortgage Options

If you are an Ontario homeowner or a borrower that would like to obtain mortgage financing, don’t let credit issues stand in your way of purchasing a home or taking out hard-earned equity from your property to pay for needed expenses.

Mortgage Broker Store has access to a broad network of private lenders across the Province. A private lender will be able to sit down with you and discuss your options directly which will help you achieve your mortgage goals.

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Mortgage Agent, Web Developer, and Real Estate Investor. Together with Ronald Alphonso I run MortgageBrokerStore.com. I write about mortgage related topics.

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Jonathan Alphonso

Mortgage Agent, Web Developer, and Real Estate Investor. Together with Ronald Alphonso I run MortgageBrokerStore.com. I write about mortgage related topics.