Private lenders rarely advertise their services, making it difficult to find them and compare what they are offering
Sudbury is one of the real estate hot spots in Ontario, even during the COVID-19 pandemic.
Data shows Sudbury home values have increased throughout 2020 due to high sales activity and a low supply of new listings.
According to the Canadian Real Estate Association, “the overall supply is currently at its lowest level in over 30 years. ”
The association also reported that 290 units were sold in October 2020, the highest number on record for that month in Sudbury history.
How Sudbury’s Rising Home Value Can Help Homeowners
When your home appreciates, your home equity increases by the same amount.
If you own a home in Sudbury, the equity in your additional home might be enough to help you get the right amount of loan or mortgage to consolidate debt, make renovations and repairs, or buy a new one. property. The extra equity can also help you make other investments that you would like. I cannot do otherwise.
Private lenders offer mortgages and other loans based on the equity in your home. Now that Sudbury homeowners have more home equity, they can work with private lenders and get bigger loans and mortgages if that’s what they need.
What is a private mortgage loan?
A private mortgage is simply a mortgage from a private lender and not from a financial institution such as a bank, trust company or credit union.
A private lender is a person or business that provides mortgage backed loans.
Why get a private mortgage?
Low monthly payments
Private lenders only charge interest to be paid each month. You don’t have to make a principal repayment until you’re ready or when the loan term expires.
Unusual real estate purchase
Banks and other financial institutions are less inclined to approve mortgages and loans for unconventional properties such as undeveloped land.
Private lenders do not judge the type of property purchased with a loan or mortgage. If you have enough money for the down payment on the property, or enough equity in the property, you can get a loan from a private lender.
Faster mortgage approval
Banks and other large financial institutions can take months to approve mortgages. Private lenders can approve your mortgage in a matter of weeks because they have fewer requirements to consider.
Lender of last resort
Large financial institutions will only lend to borrowers who meet their strict requirements. Banks require a borrower to have a credit score of at least 680 and a proven stable income before even considering a mortgage application.
These stringent requirements tend to make many borrowers who are self-employed, have no defined income, or are currently managing other debt ineligible.
Private lenders don’t care about your credit rating or income when approving a loan or mortgage. Their requirements relate to a minimum down payment or a minimum amount of equity.
Private lenders for bad credit mortgages
If the big financial institutions believe that you have a bad credit rating, or have low or unreported income, then they consider you to have “bad credit” and the mortgage you would get from a private lender would be considered a bad credit. “Bad credit mortgage”.
This term “bad mortgage” is not a value judgment on you, but is a financial industry term for the risk of lending you money. Banks and other financial institutions will not approve bad credit mortgages or loans to borrowers with “bad credit”.
The good news is that private lenders specialize in bad credit mortgages.
Approval Criteria for Private Mortgages
To qualify for a private mortgage to purchase a property, you need a down payment of at least 25 percent of the value of the property.
To qualify for a second mortgage or other type of home equity loan, you need at least 20% of the equity in your home.
A private lender doesn’t use your income and credit score for your mortgage approval, but they will use them to determine the interest rate they will charge for the mortgage. The lower your credit score and reported income, the higher the interest rate you will be charged.
Typically, interest rates for private mortgages range from 10 to 18 percent with fees ranging from 3 to 6 percent.
Are you considering a private loan in Sudbury?
Throughout 2020, the average price of a residential home in Sudbury is up almost 15% from 2019 and 9% from 2016. Private lenders can help Sudbury homeowners use the increased value of their home by converting the accumulated equity into tangible funds. If you are considering getting a private loan or mortgage, you can use the automatic private mortgage pre-approval tool for free. This tool quickly calculates whether you qualify for a mortgage or a private loan and provides information on lenders and loan options for you.
It should be easy to find private lenders in Sudbury given the upward trajectory of the city’s real estate market. However, private lenders rarely advertise their services, making it difficult to find them and compare what they are offering.
At the Mortgage Brokers Store, you can chat with mortgage brokers for free and find private lenders in your community. They will help you compare the different offers and answer all your questions about private credit. Request a quote or call for advice today.