Applying for a Mortgage with Private Money Lenders in Ontario
By : Hesham Farid
Did you know that private money lenders are available for mortgages in Ontario? You won’t find these lenders through the big banks and financial institutions, because they work exclusively with mortgage brokers. Private money lenders often offer loans secured against the equity in your property, but private loans in Ontario can also be used to purchase a property.
If you are looking for your first home but don’t meet the strict criteria of a big bank or traditional financial institution, private loans in Ontario are worth considering.
When Should You Think About Borrowing from Private Money Lenders?
You can take out a specialized mortgage product with private money lenders for a variety of reasons…
- You have a financial emergency and need to leverage the equity in your home.
- You want to make home improvements that will increase the value of your home.
- You are looking to purchase a home but don’t meet standard lending criteria.
Private money lenders aren’t banks. They are businesses and in rare cases private individuals who work with brokers. While there’s often some stigma associated with private money lenders, the reality is that they operate completely within the law, even if they aren’t federally regulated like large banks and lenders. The industry is self-regulated to ensure trust and fairness.
The key difference with private money lenders is that their lending criteria are more flexible. This translates to an easier loan process when you need to secure a mortgage.
Why Would You Be Rejected by Mainstream Lenders?
To understand the need for private loans in Ontario, you have to consider the various reasons that people are turned away from traditional financial institutions.
Some of the most vulnerable groups are new immigrants to Canada. If you have made Canada your home but don’t have the employment history or financial records of someone who has lived here their entire life, then you won’t have the same access to lenders. Banks typically require at least two years of personal financial documentation and employment history before they will even consider lending you money to buy or improve a home. Some foreign documentation may be accepted, but this is never guaranteed. Verifying any documents you do have could be prohibitively expensive when considering the legal fees and the need to communicate with private banks or government departments in your previous country.
If you have a bad credit score, then you will also have trouble securing a mortgage loan from a mainstream lender. Any credit score under 600 will be rejected by the big banks in Canada. This limits their risk exposure, but it makes it impossible for many people who have gone through financial hardship or difficulty with employment. Even if you’re in a good financial position today with a stable job, you can still be rejected based on your credit history.
There are also people with incomes that are difficult to prove. If you work in the gig economy doing freelance work, or if you are self-employed in some other capacity, proving your income and gaining the trust of a bank will be difficult. Even with strong financial history, banks see self-employed individuals as high risk. It won’t matter that you’ve built an incredible reputation and portfolio of clients in your industry.
These are just some of the key reasons why people have difficulty securing loans from banks. Mortgage brokers maintain networks of lenders that are willing and able to offer private loans in Ontario. These loans carry higher risk and attract higher rates than conventional mortgages and lending products. But there are very competitive options available, and your mortgage broker will be able to find them.
Your Mortgage Broker Can Help You to Improve Your Creditworthiness
Private loans in Ontario can be used to gain access to credit so that you can reach your financial goals. They don’t have to be long-term. Because these loans attract higher interest, it makes sense to refinance once you’re in a better financial position.
Borrowing with a private loan in Ontario can help you to move into that home that you need, build your equity, and then refinance.
Some people aren’t comfortable borrowing from private lenders or can’t afford the interest. In these cases, there are still solutions. Your mortgage broker can help you with a strategy to improve your credit score and your overall creditworthiness, increasing the likelihood that you will qualify for a more conventional product with an A or B Lender like a bank or large mortgage firm.
Talk to a Trusted Broker About Private Loans in Ontario
When used correctly, private loans in Ontario are powerful and versatile lending products that can help you to achieve your goals. The best way to find out if a private mortgage loan is right for you is to talk to a broker today
Mortgage Capital Investment is a licensed brokerage firm in Ontario with an extensive network of lenders. We will evaluate your situation and help you to find a mortgage loan that is fair, affordable, and suited to your needs.
Don’t go into any major decision without the financial advice and an advocate on your side. If you’re considering private money lenders, contact Mortgage Capital Investment today to get started with your consultation.
Lowest Residential Mortgage Rates in Canada*
|Term||OUR RATE||Bank Rate|
|3 Year Fixed/ 25 yrs||4.88%||5.39%|
|3 Year Variable/ 25 yrs||5.60% Promo||5.95%|
|5 Year Fixed/ 25 yrs||4.48% Promo||5.49%|
|5 Year Variable/ 25 yrs||5.70% Promo||6.09%|
|5 Year Fixed/ 30 yrs||4.90% Promo||5.39%|
|5 Year Variable/30y||6.20%||6.35%|
Updated: March 27 , 2023
* Current promotion rates may provide an additional 0.05% discount or may be anytime discontinued at the Lender discretion . Rates may vary between geographic regions and the posted rates on this website may not be available in your area. Please contact our MCI office for more details and current promotions.
LOWEST REGULAR RATES IN CANADA* * Current promotion rates may provide an additional 0.10% discount. Rates may vary between geographic regions and the posted rates on this website may not be available in your area. Please contact our MCI office for more details and current promotions.