Private Mortgage Lenders in Ontario
To operate in Canada, banks must adhere to strict government regulations but unfortunately, this prevents them from offering loans to some people. People who miss out on bank loans often look for private companies who specialize in offering loans to those who cannot get approved at banks. These lenders are not governed by the same rules as banks. This means that private lenders can lend to anyone in Ontario regardless of credit score.
Mortgages from Private Lenders in Ontario
Private lenders serving Ontario lend money in form of registered mortgages which are secured against real estate. The Ontario Mortgage Act allows the private lender to sell the property if borrowers are unable to pay mortgage fees. Lenders will finance mortgages for as low as $20,000, typically for one year terms.
Approval Criteria for Private Lender Mortgages
Private lenders concentrate on the market value of a property and the existing debts against it as opposed to the borrower’s credit used by banks. The loan to value ratio is the metric used by private lenders to decide whether a client qualifies for a mortgage. You can calculate this by dividing the value of existing mortgages by the market value of the house. In the case of a house worth $1,000,000 with $800,000 in debt, the LTV will be 80%. Most private lenders in Ontario will not invest in properties whose LTV is above 80% because there isn’t enough equity for them to benefit.
If a lender decides to give a mortgage for less than 20% equity, they have a very high chance of losing money. If the property is sold, a private lender must wait for prior mortgages to be repaid and only then may they recover their investment.
Reasons Why You Might Need a Private Mortgage
A private lender needs you to state why you need the money but they are lenient and will accept most reasonable explanations. Some popular reasons for needing a private mortgage include:
- To pay for home renovations and repairs
- For living expenses
- To stop foreclosure or a power of sale
- To pay off credit card debt
- To pay for education
Private lenders target people who cannot qualify for low-interest bank loans and we have a number of them in our network just for this purpose. They are ready to offer competitive terms for those who seek better mortgage terms with bad credit in Ontario.
Fast Financing from Private Lenders
Due to the mortgage rules banks must follow, it takes a very long time before they can approve mortgage applications. This is unfortunate for people who may be facing a Power of Sale or foreclosure as time is usually of the essence. Private lenders don’t have to wait long before approving loans which make them and ideal solution for those after a fast solution in different Ontario cities. If you find the right lender it can take as little as 24 hours to approve your loan request.
Information on Lenders in Ontario’s Real Estate Market
Ontario shares a border with the US. It is rich in hydroelectric energy and is home to many large dams. The province’s capital city of Toronto has a developed transportation network and a population of around 2.6 million. Toronto and cities around it have experienced significant growth in the past few years which is probably why the province is regarded as a real estate powerhouse and one of the best places to own a home in Canada.