People who do not or cannot qualify for the borrowing requirements in Canada’s big banks will find that they have a great option in using a private mortgage lender. How so? Because unlike borrowing from a traditional lender, a loan from a private mortgage lender usually comes from a group of investors or an individual investor who use their assets to lend funds to others. The best part about this is that there won’t be issues with banks!
Canadians Choose Private Lenders
Housing prices have soared quite wildly in Canada since 2009 but at the same time, interest rates have been at a record low. This trend is expected to continue for the rest of 2017 but not very welcome to many because the changing times have made it quite difficult for an average Canadian to procure a loan.
With the above said, those who have been turned down by banks due to unsteady income or low credit score have a lifeline in private mortgages. Canadians who dream of being homeowners turn to private mortgage lenders to make their dream come true.
The above is supported by the fact that about 5% of the overall mortgage market in Canada is composed of private mortgage lenders. In Ontario, they comprise about 4% of new mortgages, a total of about $1.1 billion in mortgages.
All the above points to the reality that borrowing from private lenders is increasingly helping those who cannot borrow from banks due to the tightening mortgage rules in Canada.
Choosing a Private Mortgage Lender Benefits
Because buying a home in Canada entails a down payment of 20% and not everyone have that kind of money in savings, private lenders are more and more in the spotlight. Note that banks in Canada will only fund 80% of a property’s purchase price and a private mortgage lender will usually finance more than that, making it more attractive for self-employed Canadians and those who cannot produce third-party validation to get a loan.
But how do private mortgage lenders do this? They can because they don’t have to play by the same rules as traditional lenders. Private lenders are often funded by individual investors or a group of investors who have nearly full free rein on how they conduct their business, making the loan application process significantly simpler and easier for those who choose them.
The minimal downside to borrowing from private lenders is they might want to send in their own assessors to ensure that the property they will be financing is a good investment. This is because private loans are uninsured and they make to make sure that they won’t be in the losing end should a borrower default in the future.
Borrow from a Private Mortgage Lender Today!
There are other details that you need to be aware of when borrowing from private lenders but this can vary widely according to the location and the lender. To ensure that you are getting the best deal, it is best to get the help of professional mortgage brokers who can assist you every step of the way. That is exactly what we do at Homebase Mortgages! Contact us to know more!
