Many people in Ontario simply do not meet the strict requirements the major banks have for mortgages. If you've been turned down by a bank, you might still be able to get a mortgage with a private lender. Private lenders have different requirements than the banks do, and they focus on the value of the property instead of your personal credit and income. Private lenders receive most of their mortgages from mortgage brokerages, such as Mortgage Broker Store.
What is a Private Mortgage Lender?
A private mortgage lender is typically an individual or small company that provides loans secured against real estate. Most private lenders lend in a small geographic area and do not advertise their services to the public. Private lenders can provide mortgages in amounts ranging from $20,000 to over $1,000,000. The typical private lender mortgage has a one year term and is renewable after the year is over. Most people looking for a private lender mortgage can be approved if the total of their existing mortgages does not exceed 75% of the value of the property. For example, a house worth $1,000,000 with an existing $500,000 first mortgage can qualify for a $250,000 second mortgage.
Why Use a Private Mortgage Lender?
A private mortgage lender is usually the best alternative for people who cannot qualify at banks and trust companies. Once approved, the mortgage money can be used for any purpose the borrower wishes. Common uses of private mortgage money include paying for expenses after sudden illness or loss of employment, school fees, and debt consolidation. Private lenders can simplify the process of paying off other debts by arranging to pay your debtors directly. Private lenders can also act quickly which makes them a great source of emergency funds. The typical private lender mortgage takes only 5 to 10 business days to complete.
What is a Second Mortgage?
A second mortgage is a mortgage on a property that is placed after the first mortgage. Since many banks typically will not offer this mortgage type, it is one of the most popular private lender offerings. Second mortgages are usually used in place of more expensive personal loans and credit cards since they have a lower interest rate. An average credit card or personal loan can charge a 19.99% interest whereas an average second mortgage will charge 10%. Second mortgages also come with very flexible terms with payment plans that cater to your particular situation.
What is a Power of Sale?
For all mortgages in Ontario, if the borrower does not make their mortgage payments the lender can sell their property in a process called Power of Sale. Not to be confused with Foreclosure, Power of Sale allows the lender to take possession of the property for the purpose of selling it on the open market. The proceeds from the sale will be used to pay off all debts on the property as well as any fees incurred by the lender. The remaining profits must be sent to the homeowner, but after accounting for fees, this typically is not very much. It is typically in the homeowner's best interest to get a private lender mortgage to pay off the lender that is processing the Power of Sale. If you cannot get a new mortgage, then the next best option is to sell the property yourself to avoid unnecessary fees.
How a Mortgage Broker Can Help
If you are looking for a private lender mortgage, a mortgage broker can greatly simplify the process. Many mortgage brokers have a network of private lenders that can help you get a competitive deal on a private mortgage. A mortgage broker can send your information to many private lenders at once so that they compete for your business. Not all mortgage brokers deal with private mortgages, so it is important to contact a broker that specializes in this area. The team at Mortgage Broker Store has over a decade of experience in providing private mortgages in Ontario. Mortgage Broker Store's specializations include bad credit mortgages, debt consolidation loans, home equity loans, and stopping power of sale and foreclosure. If you'd like free advice on your situation, you can call the Mortgage Broker Store team at 416-499-2122 or reach them by email at firstname.lastname@example.org.