PRIVATE MORTGAGE LENDERS

Top Private Mortgage Lenders in Canada

In the event your credit score is lower than 650, you will likely require the assistance of a private lender. Mortgage lenders can examine your credit report to determine your financial profile, which can affect whether you are approved for a mortgage. Making on-time payments, maintaining low balances on existing credit , carrying a negligible (or no) balance on credit cards, and maintaining a significant credit history all contribute to an increase in your credit score. It is imperative to work with a private mortgage broker who understands your situation in its entirety to make suitable recommendations. The top private mortgage lenders in Canada do exist in the GTA and can be accessed with the help of your broker.

*We can assist* – where CMHC mortgage insurance requires a minimum credit score to be approved. Due to the fact that the majority of subprime lenders do deal with insured mortgages, being unable to qualify for a insured mortgage automatically disqualifies you from many B Lenders. Additionally, lenders may stipulate that you to aquire mortgage insurance even if your down payment exceeds 20%.

The Best Private Mortgage Lenders In Ontario

We have been in the private morgtage lending arenan for decaded and have had the good fortunre of knoing the best private lenders in on Ontario, and what makes them a good choice for our client base. Over the years, we have seen multiple lenders come and go and a few have stood the test of time where great rates and fair terms are applicable. Relax and let us analyze your unique circumstance and find  you the best private mortgage lenders Ontario has to offer.

Who can benefit from private mortgage lenders?

Private mortgage lenders assist traditional lenders in filling the void left in the marketplace where folks are unable to qualify for a conventional mortgage. Individuals with a limited credit history in Canada, such as new immigrants, may face additional obstacles when seeking mortgage approval from banks.

Newcomers to Canada

Due to the fact that Equifax and TransUnion collect credit file information only in Canada, individuals with foreign credit will need to reestablish their credit record from scratch. Certain lenders may make exceptions. Additionally, newcomers to Canada may have a limited employment history in Canada. For newcomers to Canada without two years of local Canadian employment, will be in a position where most banks require a minimum 35% down payment. Additionally, the bank would request a letter of recommendation from the applicant’s primary bank.

Individuals with Self-Employed/Inconsistent Income

Banks frequently require applicants to provide two to three years of employment history to demonstrate a stable source of income. Obtaining a self-employed mortgage can be difficult, particularly if your income is inconsistent and changes significantly. This is especially true for those who earn their living through commission and/or tips, which in many cases are not declared.

Individuals with Foreign Earnings

Foreign income might also make qualifying for a mortgage more difficult, particularly if it is not easily verifiable or recognized. However, there are exceptions. Some banks  allows foreign applicants to provide a down payment of at least 35% to be considered for a mortgage, according to a report issued a few years  back. Certain smaller banks have voiced in and it was discovered to require verification of foreign earning sources for loans with a down payment of less than fifty percent on the mortgage being taken out – ridiculous to say the least.

Banks in comparison to Private Mortgage Lenders

Private mortgage lenders are a viable alternative to typical A lenders such as Canada’s chartered banks, & credit unions. In Canada, banks are regulated by the federal government and are required to perform a stress test to determine whether you can afford your mortgage payments if interest rates rise.

While not required, certain provincially regulated financial institutions, such as credit unions, conduct a mortgage stress test as well. What happens if a mortgage stress test is failed? If you fail the mortgage stress test, the lender will refuse to lend to you even if you meet all other criteria, such as credit score. Private mortgage lenders do not require a stress test and may be a viable option if you need no hassle financing. 

Private Mortgage Lenders Compared to B Rated Banks

Certain B Lenders,  are semi-regulated lenders that are not directly overseen by the federal government but are subject to regulations indirectly as a result of the scope of their business. Private mortgage lenders along with Subprime Lenders do not require a stress test and are subject to fewer lending restrictions than Bank Lenders.

Subprime B Lenders, who are typically larger financial institutions, specialize in insured mortgages. This means that the loan-to-value (LTV) ratio would be greater than 80%, as the down payment would be less than 20%. CMHC mortgage insurance has specific eligibility requirements, including a minimum credit report score, a maximum purchase price, and a maximum amortization period. There are options independent of CMHC insurance that include private mortgage insurance providers such as Canada Guaranty and Sagen.

The Types of Private Mortgage Lenders in Ontario:

The three most common types of private lenders are as follows:

Individual lenders:  are those who invest their own money in private lending.

Syndicate investors: A syndicate mortgage is one in which a group of investors pool their personal funds to invest in a single mortgage.

Mortgage investment corporation (MIC): When a group of investors pool their personal funds and make them available to invest in multiple mortgages concurrently, provided the borrowers meet specific loan qualification criteria, this is referred to as a Mortgage Investment Corporation.

Consider: What Are The Private Mortgage Lenders Rates?

Interest rates on a private mortgage are determined by a variety of factors, including the loan amount, the property’s value, and its location. Private mortgage interest rates range from 3.99 percent and up for a private first mortgage and from 5.99 percent  and up for a private second mortgage, depending on the lender’s underwriting criteria.

One would think that Individual private investors are typically able to offer better interest rates than a MIC, as a MIC must earn a higher rate of return on their investments while also paying themselves interest. But this not always the case. There are many MICs in the marketplace that are comparable to some B lenders where mortgage interest rates are concerned. Do call us to discuss your personal circumstances in further detail to see if you qualify.

Due to the fact that private lenders typically charge higher interest rates than conventional mortgage lenders, borrowers will seek out private lenders only after being denied by banks and other alternative lenders such as Credit Unions and smaller financial services companies.

Victor Kaushal at Expert Mortgage will ensure that Lenders are vetted for best practices and the fair treatment of our client base with clear terms put in writing in the mortgage funding process. These include: