Finding private mortgage lenders near you in Ontario is not as difficult as you think. Circumstances might make it difficult to qualify for a traditional mortgage. If you have bad credit or you’re self-employed, a bank may turn you down when you apply for a loan.
That’s where private mortgage lenders can help. Learn how you can get the loan you need to buy a home in Ontario.
Private Mortgage Lenders 101
Let’s take a look at private mortgages and how private mortgage lenders can help. A private mortgage is financed through a private funding source like a family member or an investment company. Private mortgages are an alternative to traditional bank loans. They are helpful if you have bad credit or a past bankruptcy.
Qualifying for a bank loan can be difficult. You must have a high credit score and consistent high income with a long-term work history. Private mortgages don’t consider credit score or income.
A private mortgage lender focuses on the amount of equity in a home. They typically lend 80-85% of the home’s value. They provide funds much more quickly than a traditional bank or mortgage lender.
How to Find a Private Mortgage Lender
Whether you are looking for a home loan, home equity loan, or funds to acquire investment real estate. A private mortgage lender can be a great option. Because private mortgage lenders are often close friends or family members, many people secure private mortgages through those relationships.
Leaning on your family and friends for a loan may not not be the option you want to explore. Seeking out a private mortgage lender makes more sense. If you plan to invest in property regularly and need funds speak to and experienced mortgage broker.
Another option is to work with a mortgage broker who specializes in private mortgages. In the Ontario area, LendToday helps people find the financing they need for a home loan even if they don’t qualify for a traditional mortgage.
An experienced mortgage broker can help you understand the details of a private mortgage and help you find a lender. They will explain the requirements and process for getting approved for a loan and help you put together the required documentation.
Why Choose a Private Mortgage Lender?
There are many reasons to turn to private lenders for a home mortgage or home equity loan. LendToday helps people in the Ontario area for a private mortgage when they:
- need the money fast and can’t wait for a long approval process
- have bad credit that prevents a traditional loan
- are self-employed or have a profession that doesn’t declare income in a traditional manner
- only need a short-term loan
- buying a property that doesn’t fit with a bank’s typical loan portfolio
Benefits of a Private Mortgage
There are a lot of benefits to choosing a private mortgage. Qualifying for a private mortgage is much simpler than a traditional mortgage. Poor credit scores don’t automatically disqualify a borrower.
Decisions are made much more quickly, too. Instead of waiting weeks for a loan originator to decide if you qualify for a loan, a private lender can decide in a few days. If you are trying to move on an investment property, this can mean the difference between winning or losing a home.
There is no fixed set of terms with a private mortgage. You can negotiate the details with your lender and create a mortgage agreement that works for both of you.
What Kind of Loans Do Private Lenders Provide?
Because private lenders work in a different way than a credit union or bank, they have more flexibility in the types of loans they offer. A private mortgage lender can provide first or second mortgages, home equity loans, or loans for short-term investments.
Private mortgages are also beneficial for paying off or consolidating debt. If you have equity in your home, you can secure a private loan to pay off credit cards or other debts that carry a higher interest rate. You’ll be able to pay a single lender and better manage your debt.
Private Mortgage Terms
Most private mortgages have a term of one to three years. They are ideal for real estate investments you plan to turn quickly or consolidate and pay off debt. Even though a private lender doesn’t use the same criteria as a bank to determine your qualifications, they do use some of the same types of terms.
You will sign a promissory note that is a legal contract between you and the lender. This document will include the interest rate applied to the loan, payment dates and schedule, and any penalties associated with non-payment or late payments.
You will also have a deed of trust that secures the home as collateral for the loan. It outlines the legal and recognized owner of the property, the borrower’s responsibility to repay the loan, and the actions the lender can take if you do not meet the loan requirements.
Because private mortgages are constructed based on specific needs, it’s important to work with an experienced broker.
You Have Options
For many people in the Ontario area, traditional bank loans and mortgages are not possible. Bad credit or self-employment, may make it difficult to secure a typical mortgage loan. In these cases, a private mortgage lender can be a good alternative.
You can find private lenders by working with an experienced mortgage broker. An approval is based on the property’s equity, not credit scores, and decisions are made in days.
If you’re looking for a home loan from private mortgage lenders, we have options. We can help you when traditional lending might not be the right fit.
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