Private Mortgage Lender
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Private mortgages are short term secured loans. They typically run for terms of between one and three years. The borrower is not required to pay back the principle amount. The monthly repayments cover only the interest with the principle recovered at the end of the term.
Private lenders have taken advantage of a gap in the market. They realized that the stringent lending criteria employed by conventional banks had left many with no recourse to the banks. Many of these would-be lenders could nonetheless afford to repay such loans. Private lenders look at more than just the credit history of the borrower. They are equally concerned with the market value of the property that will secure the loan.
Private lenders often specialize in certain sectors of the market. Because of this your broker can connect you with a private lender who best suits your needs.
When are private mortgage lenders best?
There are many circumstances where conventional lenders will not approve you for a mortgage. This is when a private mortgage lender could save the day. You would need a private mortgage lender in the following situations.
- Your credit history is not good so conventional lenders will not fund you. With a credit score of less than 600 you are not likely to qualify for a conventional loan.
- The banks won’t fund the property that you want to buy because it is not a conventional property.
- You don’t have time to wait through the long approval process of the prime lenders.
- You are self-employed or unable to prove your current income, so the prime lenders won’t approve the loan you want.
- You need a loan for a short period of time.
What interest rates will I pay on a private mortgage?
Private mortgages carry more risk for the lender. They, therefore, attract higher interest rates. Currently interest rates on private mortgages range from 10% to 18% depending on the financial circumstance of the borrower and the characteristics of the property. Rates may change in response to changes in economic conditions.
Interest rates also depend on which type of lender you use and the rate of return that the investors require.
Because you’ll pay higher interest rates for a private mortgage, you would only go this route if you cannot get loan approval from a conventional bank or bad credit lender.
What fees will I pay for a private mortgage loan?
When you borrow from a conventional lender you don’t worry about the fees as the lender pays the commission. With a private lender, however, the borrower pays the fees. There is also a setup fee for the private loan. Overall the fees come to approximately 1% to 3% of the borrowed amount. Fortunately, you can include the fees in the mortgage.
How long does it take to get approval?
It takes significantly less time to get approval of a private loan than a conventional loan. Approval will take between two and seven days. You’ll receive the funds in a matter of two to three weeks.
The private lender is in the business of short-term loans. They will prepare you to change to conventional lender so that you can repay the capital on the private mortgage at the end of the term.
What factors do private lenders look at?
- Income – If you are unable to confirm your income, private lenders will use an estimate of your income based on an industry average.
- Property value – the lender will insist on an appraisal as the property secures the loan. In the event of you defaulting it is used to repay the capital.
- Down payment – you will need a down payment of at least 15% as the loan to value ratio of the property must be at least 85%.
- Equity for refinancing – you are allowed a maximum loan to value of 85% if you are refinancing.
Get a Private Mortgage in Toronto from Reliable Private Mortgage Lenders
We Offer Private Mortgage To Everyone
At Toronto Mortgage Brokerage we offer a private mortgage to everyone regardless of their situation and at a lower rate. We will not turn you down with harsh guidelines; rather we will find a solution that fits your needs.
Getting your mortgage through a financial institution such as a bank can be more expensive and sometimes not even possible.
Banks are known for their stringent rules when it comes to lending money to clients. In certain cases or to certain people banks will not agree to lend to.
We Are Focused To Improve Your Current Situation
By dealing directly with a private mortgage brokerage, like us, you receive flexible and open terms. Unlike at the bank, where your options a more limiting and you will be faced with additional lender fees. At Toronto Mortgage Brokerage we understand and sympathize with people that are in different circumstances and situations and want to help you get the mortgage you deserve. We will focus to improve your current situation and transition you into conventional financing. Contact us to discuss what we can do for you.
Private Lenders in Toronto are Easier to Access than Traditional Banks
Recent legislation and rising interest rates are making it increasingly difficult for Toronto residents to obtain mortgages through traditional sources. This is why more and more would-be homeowners are turning to private mortgages to purchase their dream property.
Because private mortgage lenders are funded by investors or groups of investors, they are not bound by stringent federal legislation in the same way as regular banks are. When you obtain a private mortgage from a Toronto mortgage lender the property that you buy serves as the collateral on the loan.
Meaning that if you default, the property will be sold to recover the loan. This is why private mortgage funders are more interested in the property than in your financial position.
Private mortgages are not insured, and so the property is the lender’s only recourse should you default on your payments.
If you have failed to make the stringent application process on a regular mortgage, you could finance your property through a private mortgage. This sector is free of the rigid criteria that are in place at regulated financial institutions.
What is a Private Mortgage?
A private mortgage is a one to three-year, interest-only loan that private lenders will extend to you based on the equity in your home. The amount that you can borrow will depend on the amount of equity in your home and your personal set of circumstances.The interest rates on private mortgages are higher, but this reflects the greater risk to the lender.
In calculating the interest rate that you will pay, the private lender will look at the risk factors.
- The Loan to Value – the lower the percentage, the lower the risk
- Your income
- Your credit scores
Private lenders are, of course, interested in your ability to repay the loan. They are less interested than the banks are, in your slightly tarnished credit record. You can get mortgages in the Toronto area for up to 95% of the equity in your home.
Working With Us Means
- Extended network of connections
- Self-Employed or Unemployed
- First-time homeowner
- Debt consolidation
- Recovery from bankruptcy
- One or more arrears
We Find Solutions For Difficult Situations
We give you the best experience at Toronto Mortgage Brokerage. If you have bad credit or cannot easily prove your income, need fast and reliable service then we are the team to achieve your goals.
We Create A Unique Plan That Reflects Your Conditions
We provide a vast variety of financing options so don’t hesitate to speak with us. Our expert staff will create a unique plan that reflects your situation. Let us know what you are interested in and we will make it happen.
You May Benefit from a Private Mortgage in Any of the Situations Listed Below
- You have been turned down by a traditional lender
- You need a short-term loan using the equity on your home
- You need to pay property or income tax arrears
- You want to benefit from the consolidation of high-interest debt
- You want to make a real estate or commercial investment
- You want to purchase property that the regular banks won’t finance
Regardless of the reasons for wanting to make the loan Certified Mortgage Brokers Toronto can help you to tailor make a loan with repayments that you can afford and an exit plan for the future. Mortgage brokers have long associations with a large number private lenders and specialize in ensuring that you are partnered with the private lender that will understand your circumstances and offer you the best package.
The loan approval processes of the major banks mean that approval can take a while and this can create a problem when a property transaction requires a quick response whereas private lenders will react quickly and can supply funds that will allow you to take advantage of an opportunity. One of the great advantages of using private lenders is their flexibility in meeting your needs.
Taking a private mortgage can buy you the time that you need to improve your credit score so that you can qualify for a regular mortgage at the end of the term.
Alternative and Private Lenders
Of late many alternative lenders have been given a bit of a tough time by the media. Writers have tended to paint mainstream bank mortgage providers as the be-all and end-all and everybody else as the villain of the day.
They use phrases such as alternative lending, sub-prime lending and shadow lending. They accuse private lenders of using the more stringent mortgage requirements of the main stream banks, to push up interest rates and drive people further into debt.
This is not the case. A mortgage seeker with a good credit rating very often get interest rates from private lenders like those offered by mainstream banks.
There are three types of lender in the residential mortgage market. These are;
- A Lenders
- Private lenders
- Alternative lenders or B Lenders
Anyone who can pass all the rigid rules that the A lenders apply would happily borrow from them. They benefit from lower interest rates and zero additional costs unless they require a high ratio mortgage.
There are three types of A lenders
- Chartered Banks – apply the stress test. Self employed people may have a problem getting a mortgage and their early payment penalties are very high.
- Credit unions – don’t use the stress test for mortgages that aren’t insured.
- Monoline mortgage lenders – only deal in mortgages. All dealings are online or via telephone. Their biggest advantage is that their prepayment penalties are the most reasonable.
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Private Lenders Toronto
Private lenders consist of organizations and even wealthy individuals who are willing and able to lend money to those who are battling to borrow money.
They serve a valuable function in the industry, since they service people when no one else will help them. On the downside their rates and fees are higher, and they don’t offer insured high ratio mortgages.
Private lenders are less interested in the borrower than they are in the property that will serve as collateral. They want to know that if the borrower defaults the property will cover the loan.
Canada has many large organizations that are in the business of offering private loans. You can, however, take a private loan from just about anybody you know who has the funds and is happy to risk them.
Before you start any loan, discussions make sure that you have consulted a licensed mortgage broker and hired a real estate lawyer to assist with the deal.
Alternative Mortgage Lenders – Also Known a B-Lenders
The alternative mortgage lender operates in the mortgage territory between private mortgage lenders and A-lenders. They will lend you money when you haven’t quite made the grade with the A-lenders but also don’t need the assistance of a private lender quite yet. They do not offer high ratio mortgages so a 20% down payment is a prerequisite. Most of the alternative mortgage lenders also offer mortgages that are aimed at borrowers who can get loans from A-lenders. Alternative lenders are reputable and regulated. In fact, they form part of the fastest growing mortgage sector in Canada’s.
Alternative lenders charge slightly higher interest rates than the A-Lenders. They will also charge you a one-time fee for lending. You’ll also have to make contact through your mortgage broker who may also charge a fee. If you intend to use an alternative or private lender your mortgage broker is your first port of call. Mortgage brokers have many alternative and private mortgage lenders on their books which is why they can get you a mortgage offering the best terms and conditions. Your broker can also work out all the costs for you so that you are not faced with costly surprises.
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