Many people give up on their dreams as soon as they have been rejected by a few banks, not aware that there are other avenues available to them. Even if you have been approved for a loan by a bank or other financial institution, it doesn’t necessarily mean that it’s the best you can do in your specific situation.
After all, mortgages usually have very long terms, are rigid and inflexible, and can take a very long time (and a lot of effort) to secure. That’s if you even pass the rigid requirements that banks impose when evaluating someone for a loan.
A private mortgage is one option that’s regularly overlooked by new investors or the average layman looking for a loan on a family home. Many people are also turned off because they see them as inherently risky. However, private mortgages are a valid alternative to traditional financing and may even be better under your specific circumstances.

What is a private mortgage lender?

A private mortgage lender can come in many shapes, forms, and sizes. It can be made up of either an individual or group of people. Technically, any financing from a private source fits the description but the popularity (currently 40% of mortgages are private in Canada) has seen it grow into a real industry with real professionals.
As they are not tied down as much to other national and state regulations, they are a lot more varied and flexible in their offerings. Typically, these are businessmen and investors who are in it to make as big a profit as possible.

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A side by side comparison of private mortgage lenders and banks

Traditional Financial Institution Private mortgage lender
Requirements Typically, private mortgage lenders are investors looking to make a profit, just like you. This means they tend to focus more on the potential payoff and success of the investment. Banks base their loan or mortgage decisions on the reputation of the borrower. One very important factor is your credit score. Other things include your current debt to income ratio.
Limits or regulations The sky’s the limit when it comes to private mortgages. It’s one of their main benefits that they aren’t tied down by state or national regulations. Although they are still regulated by some agency, such as the FSCO for Ontario. Loans and mortgages have limits and minimum amounts set by the CMHC and OSFI. Things such as a minimum down payment, a maximum loan amount, etc. are prescribed. Some of the borrower requirements are also imposed.
Geographical limitations Private mortgage lenders tend to have a scope of operations in which they are willing to consider a loan. Banks or other traditional financial institutions offer the same packages nationwide wherever they have branches.
Terms These loans are generally given for a shorter term of 1 month to 2 years. Interest-only is sometimes available. Loans can be anywhere from 5 to 30 years. Interest-only is sometimes available.
Interest rates Interest rates are on average higher at 8-12% which is more than double what banks offer. Interest rates are low at between 2 and 4% for Canadians.

Google Reviews

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Henry Wright

Was looking for a mortgage broker in Toronto. Heard about Leon and his team from a co worker and decided to give them a call. after some time on the phone talking about mortgages and what would work best for me I was VERY impressed. They were polite and most importantly they knew what they were talking about. We then scheduled an appointment and I got my mortgage with a great rate. Definitely recommend.

Gina Carroll

Got tired of sow service and mediocre rates from my bank, so I started looking for a mortgage broker. Had some family friends recommended Leon and his team, so decided to check them out. Was very impressed with Leon, he guided me through step by step, recommended a mortgage and I ended up switching to him. My rate is better and he always answers call and emails right away.

Wilton Marble

A little while back my wife and I finally decided to stop renting and get a place of our own. After some searching we found a condo we both liked and that was in our price range. The next step was a mortgage, but honestly, neither of us knew too much of what we were getting into. We found Leon and his team after a quick search on google and have had a wonderful experience. Leon and his team of mortgage brokers are VERY knowledgable, polite, work fast and just all around very professional. They answered all our questions and we got a great rate.

Afton Jaskolski

Getting a private mortgage was not easy to be honest, but at least with Mr. Leon it was doable. Thank you for your help!

Wendy Langdon

Going through with this company was my best decision. These Burlington mortgage brokers are real professionals. They helped me to save thousands of dollars, I'm not sure I'd find such a good offer myself.

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