Due to the strict mortgage requirements of the big Canadian banks, many people seek mortgages from private lenders in Peterborough. These lenders are not affiliated with any of the major banks, and are more open to more flexible mortgage terms.
Many people who cannot qualify for mortgages at major banks can be approved for private lender mortgages. The main factor that private lenders use for approving mortgages is the equity left in the property. This is less strict than major bank requirements, which often include good credit scores and high incomes. Private mortgage lenders can offer more customized payment schedules and arrange for interest only mortgage payments.
Why use a private mortgage lender?
- You are looking at buying a non-standard property than banks won’t finance
- You need the money very quickly
- You have bad credit and are turned away from banks on this basis
- You only need a mortgage loan for a few months
- Your income is low or cannot be confirmed
Rates and fees for Peterborough private lender mortgages
Private lenders typically have higher interest ranks than banks. The rate they offer depends on the equity in the house, economic conditions, and the applicant’s employment status and credit rating. While home equity is the key factor for approval, these other factors can impact the rate that is offered. Generally, private lenders offer rates that range from 7%-12%. Many people opt for short term private mortgages and then later apply for a lower rate bank mortgage when the private mortgage’s term is over.
Fees that are charged for private lender mortgages
When setting up a private lender mortgage, there are multiple fees and parties involved. The mortgage broker has setup fees, as does the private lender and real estate lawyers. The total fees typically amount to 1%-5% of the total mortgage amount. For example, on a loan of $100,000, the fees will total around $1000-$5000. Sometimes the fees are attached to the mortgage itself, for example, the mortgage amount can be $105,000 with $5000 going towards setup fees.
Peterborough private mortgage lenders and their specializations
Often times private lender choose to only invest in specific types of properties. Some examples of such properties include:
- Residential detached or semi-detached houses
- Smaller condo homes
- Commercial real estate, such as shops or warehousing
- Rental properties, where the owner does not live in the property
How quickly can private lender private a mortgage
Most people are approved for the mortgage withing a few days. The money is usually transferred in 1-2 weeks. If the money is required more quickly it is possible to have the money transferred in 1-3 days, however, this incurs additional fees.