Using a private mortgage lender is a great option for those in Vaughan who do not qualify for a mortgage with Canada’s big banks. Unlike traditional lenders, a private mortgage loan typically comes from either an individual investor or a group of investors who want to lend to others. On top of that, you are not subject to the same kind of scrutiny as from the banks.
More Canadians Turning to Private Lenders
Canadian housing prices have soared more than 35% since December 2009. Over the same period of time, interest rates have been at record lows. And they are expected to remain so until at least 2017.1 At the same time, changing mortgage rules and banks that have become more conservative mean it’s more difficult for the average Canadian to get a loan.Â
Private mortgages can be a lifeline for those who have been turned down by the banks because of a low credit score or unsteady income. More and more Canadians are turning to private mortgage lenders to make the dream of owning a home a reality.
Today, private mortgage lenders account for around four to five percent of the overall mortgage market. In Ontario, private lenders account for about four percent of new mortgage originations (or $1.1 billion of total mortgage lending by dollar value).2
The fact of the matter is that a private mortgage is a viable option for those who do not qualify under the ever-tightening changing mortgage rules in Canada. For example, in 2008, you could get a 40-year mortgage and buy a home with no money down.
This year, the amortization period for a mortgage has been reduced to 25 years, the minimum down payment for a new government-backed mortgage has been raised to five percent, and the minimum down payment for non-owner occupied properties is at least 20%. And first-time homebuyers need a credit score of at least 620.3
On top of that, the Canadian Mortgage and Housing Corporation (CMHC) discontinued mortgage products for second homes and for those who are self-employed (without third-party validation). Those who are self-employed are asked to make larger down payments, show more documentation, and have even better credit scores.
Benefits of Using a Private Mortgage Lender
Private lenders are perfect for those who do not have a 20% down payment. Where Canada’s big banks will only fund 80% of the purchase price of a property, a private mortgage lender will finance significantly more. They are also a great option for those who are self-employed and cannot prove third-party validation to get a loan.
Keep in mind that private mortgage lenders operate differently from traditional lenders. One big difference is that private lenders get their money from groups of investors or even individual investors.
The application process is also a lot simpler: Instead of having every aspect of your financial life scrutinized like with a bank, when it comes to private lenders, the most important thing is the property you are buying. Because private loans are uninsured, lenders want to ensure the property is a sound investment should a default occur.
As a result, if you live in a small town or rural areas, you may not qualify for as much with private lenders as you would if you wanted to purchase a home in an urban setting like Vaughan.
Ultimately, private mortgage loans can be used by those who need money for a short period of time or those looking to access funds refused to them by the banks.
Canadalend.com Vaughan’s Private Mortgage Lenders
At Canadalend.com , our licensed, independent agents will help you get a private mortgage with the best rates and terms. As the nation’s leading private mortgage professionals, Canadalend.com has access to hundreds of private mortgage lenders who specialize in both residential and commercial loans. In fact, many specialize in helping those who are self-employed, have bruised credit, or have even filed for bankruptcy.
To see what kind of private mortgage loan you qualify, contact us today at (905) 881 0242 or info@Canadalend.com. You can also apply online and a Canadalend.com lending specialist will help you set up an appointment for a free personal consultation.
“Teranet Housing Price Index History,” House Price Index, November 27, 2015, http://www.housepriceindex.ca/.
Hopkins, A., “Ordinary Canadians become bankers as shadow mortgage lending rises to meet housing demand,” Financialpost.com, July 9, 2015, http://business.financialpost.com/personal-finance/mortgages-real-estate/ordinary-canadians-become-bankers-as-shadow-mortgage-lending-rises-to-meet-housing-demand.
“What are the General Requirements to Qualify for Homeowner Mortgage Loan Insurance?” Canada Mortgage and Housing Corporation, November 27, 2015, http://www.cmhc-schl.gc.ca/en/co/moloin/moloin_003.cfm.