How Private Mortgage Lenders Can Help You Get Financing

David Jeffrey
Published: March 23, 2021
Last Updated: October 24, 2023

David Jeffrey
Published: March 23, 2021

Getting a mortgage at conventional banks can be stressful, especially for high-risk borrowers. Most of these financial institutions would look at a borrower’s credit rating before qualifying them for a mortgage. They need to also satisfy strict criteria before approving a mortgage. Borrowers with bad credit ratings are most likely denied any financing. This is why most Canadian homeowners would seek help from private mortgage lenders.

If you have found a good property or simply want to refinance one and the bank won’t finance it a private mortgage is a good solution. Private lenders are also beneficial for those who need quick financing and can’t wait for the long approval process or those who need a short-term loan.

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How Private Lenders Can Help Borrowers

Private lenders in Ontario can help homeowners obtain financing. Unlike banks, these types of lenders do not look at your credit rating. What they do consider is the value and marketability of your property. If the property is in a really good location – private lenders will most likely approve your private mortgage. A private mortgage is just a regular mortgage but funded by investors or lenders and not banks. You can qualify for this type of mortgage if you are a homeowner and have equity in your home.

Who is eligible for a private mortgage?

Borrowers who have bad credit or don’t have any credit
People who need emergency funding
Applicants who have irregular income or those self-employed
Borrowers who filed for bankruptcy

Applying for a mortgage in a bank can take several weeks and getting approval is slim for high-risk borrowers. The best alternative to this is private lenders. Get help from a professional broker to help you find a private lender who can give you the best terms for your mortgage. We help borrowers in Ontario obtain mortgages for private lenders.

Are There Requirements to Obtain a Private Mortgage?

Although private lenders do not base their decision on the borrower’s credit rating, they do look at certain criteria.

Value of Your Property

This is the most important requirement private lenders look into before approving any loan. First, they will check the type of property being secured and how much it’s valued at. It may undergo an appraisal so they will know how much it’s worth and how much money they can lend you.

Proof of Income

Conventional banks are strict when it comes to loan approval. Those with bad credit ratings, low income, borrowers who filed for bankruptcy and self-employed borrowers with non-confirmable income may not be approved for the loan. For private lenders, you’ll need to only show them a strategy to make the payments. If you can show that you have the means for repaying the loan, then you will likely be approved.

Downpayment (if you are purchasing a property)

To increase chances of approval, borrowers may be asked to put in a downpayment of at least 15%. It will show lenders that you can keep track of your finances. Although not required, it will be even better if you can put down an even larger downpayment so you can get approved for a higher loan amount.

Home Equity for Refinancing

You can qualify for a loan if you have equity built up over time. Borrowers can borrow up to 80% of their home equity and they can use this however they want to. Most homeowners in Canada would obtain a second mortgage for home improvement, debt consolidation, investment, etc.

Work with us so we can assist you better and help you get approvals faster.

How Does it Work?

It is easier to get approved for a private mortgage if you have equity built up over time or have a large downpayment. The loan amount will depend on the value of your property and the equity.

With private mortgages, borrowers can use the money however they want to. There are no restrictions to this unlike with a regular mortgage. Some homeowners would use their second mortgages to pay off all of their debts and rebuild their credit, for home renovations or home improvements, college education. Some would use it for investing in another property. Make an effort to pay the balance in full or on time. Keep in mind that a second mortgage is still a loan – if you default, your credit rating will be affected. To avoid foreclosure, it’s important that you make the payments on your private mortgages.

Working with mortgage brokers can help you successfully find a private lender in Ontario. These professionals know the industry very well – most of them have access to multiple lenders who can give borrowers what they want: better terms for their loans.

Although you can always look for a private lender yourself, we wouldn’t recommend it. It’s important that you do comparisons with multiple lenders – how much fees they’re charging and the terms of the mortgage. With a mortgage broker’s help, you will be able to find a private lender who can give you better terms for your loans.

Contact LendToday

There are several private lenders in Ontario and it can be overwhelming if you are not familiar with them or if you do not know how private mortgages work. Our team has the experience and we can help. To streamline the mortgage process, we can take care of everything for you.

We have been helping homeowners for over 30 years and have worked with multiple lenders in the past. Let us know what you need and we will utilize our expertise to help you the best way we can. We offer several mortgage services to homeowners – Second Mortgage, Home Equity Lines of Credit, Home Equity Loan Options, etc. Talk to us so we can help you find the best financing options for your needs.

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David Jeffrey

Hi there, I’m one of the founding members of Lendtoday.ca. Our journey to start this business began with friendship and a belief we could help people solve their mortgage problems. We wanted to provide a safe space for people to be heard and not judged. I’ve spent many years in the accounting and financial industry and heard the same thing repeatedly from friends and colleagues. “When we try to get anything done, we’re treated like a number and not a person". To me this made no sense. Taking the human and personal connection away removed an important piece of the relationship. Hearing what people needed was really the fastest way to solve their problems. I felt that my experience in working closely with people would be well suited for an industry that is slowly moving away from personal interactions.