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RESIDENTIAL MORTGAGE
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COMMERCIAL MORTGAGES
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Private Mortgage
When a traditional mortgage might not be right for your circumstances, a private mortgage might be a mortgage for you to consider. A conversation with our mortgage agents will help you understand your options.
Traditional lenders include chartered banks, credit unions, and Canada’s Big Six Banks (RBC, TD, Scotiabank, BMO, CIBC, and National Bank) are federally regulated and they must conduct a mortgage stress test to determine whether you will be able to afford your mortgage payments if interest rates rise.
Despite the fact that it is not required, some provincially regulated financial institutions, such as credit unions, conduct a mortgage stress test also.
The home-buying experience explained:
What Happens If A Stress Test On A Mortgage Fails?
Even if you meet all of the other criteria, such as credit score, if you fail the mortgage stress test, the lender will not lend to you. Private mortgage lenders are not required to perform a mortgage stress test, but they can assist you if you fail it.
What Is A Private Mortgage?
Mortgage lenders are categorized into 3 types of lenders.
- A Lenders – Banks
A lenders will require you to provide proof of the following with minimum standards in place:
- Income
- Credit score of a min of 680
- Down payment 20%
- Condition of the property
- B Lender – Credit union and secondary Banks
B lenders will require the same information and document and conditions as A lenders however they typically have higher interest rates.
- Income
- Credit can be as low as 500
- Down payment 20%
- Condition of the property in major market
- Higher interest rates than A lenders
- Private Lenders
Private Lenders require the same documentation as the other lenders however the conditions to be met are lower but the interest rates are higher.
- A minimum 10% down payment
- Condition of property
- Higher interest rates
Private Equity Mortgage Lenders
Access our private investor portfolio of more than 200 private mortgage lenders.
Best Private Mortgage Rates
Private first mortgage interest rates around 5.49%. Private second mortgage rates around 6.99%. However there is a great fluctuation. When you call us, we will share with you most updated rates of the market.
Fast Private Mortgage Lenders
Bad credit home equity loans approved as the loan approval is based on equity.
Private mortgages explained
What Is A Private Mortgage?
A private mortgage is a type of mortgage program approved and funded by a private lender, mortgage investment company, mortgage brokerage, or mortgage administration.
A private mortgage is typically used for purchasing or refinancing commercial or residential property. Private mortgage lenders lend money to borrowers based on equity in their property. Private mortgages are registered on the title/deed of a property, just like all mortgages.
Why Get A Private Mortgage?
A private mortgage can serve a variety of needs both for home owners, home buyers, and commercial property owners/buyers. Below is a list of private mortgage programs, and reasons to get a private mortgage.
Private First Mortgage
Private first mortgages explained
A private first mortgage (1st mortgage) is a first priority mortgage charge registered on the title (deed) of a residential property, commercial property, land, and can also be used for construction financing.
A private first mortgage can be used for purchasing real estate, and also refinancing an existing mortgage on a property. People generally obtain a private mortgage due to bad credit, and/or they may have no income or unable to provide traditional proof of income, and qualify based on bank’s or B lender’s lending criteria.
Ontario Private lenders for first mortgages will typically lend up to a maximum of 75% loan to value (LTV) in large urban cities.
Private Second Mortgage
Private second mortgages explained
A private second mortgage is a mortgage registration on the title of a property which sits in second position, behind a first mortgage, similar to a HELOC.
Private 2nd mortgages are usually taken out by home owners looking to access their home equity, for many reasons including debt consolidation, home renovation, paying CRA tax arrears, bringing first mortgage payment into good stands to stop power of sale, and more.
Frequently Asked Questions About Private Mortgages in Ontario
Getting approved for a private mortgage, from a private lender, or private lending company is usually based on equity available or equity committed in real estate.
When home owners want to refinance a private mortgage, or get a private second mortgage or private third mortgage, private real estate lenders require home owners to have a certain amount of percentage of equity, called Loan to value, available in their home to get approved.
When purchase a property and getting a private mortgage to close a home purchase, private mortgage lenders in Ontario will require home buyers to have a minimum down payment amount, usually about 20% of the purchase price, or appraised value of a home.
No, a private mortgage will not have a negative effect on your Equifax or Transunion credit report or credit score. In fact, many home owners who are carrying debt anywhere between $15,000 and upward, often take advantage of a private second mortgage to consolidate debt. This allows home owners to combine all outstanding debt into one single mortgage, at an interest rate that is lower than the unsecured credit, with one monthly payment.
Taking advantage of using your home equity for a private first mortgage or private second mortgage to consolidate debt will help improve your credit score overtime.
A fast private mortgage closing can be accommodated with 24 to 48 hours to close and fund a private mortgage. Generally, without rush a realistic expectation is 4 to 10 days as an appraisal inspection is often required for a private mortgage, which is sometimes timely.
Rush appraisals can be ordered, where an appraisal will take place same day.
As a borrower taking a private mortgage, it is not recommend to order your own appraisal report, as it may not be accepted by the private lender funding your private mortgage. It’s best to allow your mortgage broker to order the appraisal report from an appraisal company that is accepted by the private lender in Ontario.
Private mortgage interest rates will usually vary based on the equity available in a property, along with a few other credentials a private lender may require. Interest rates for private mortgages will also vary based on the type of private mortgage such as private first mortgage, private second mortgage, or a private third mortgage.
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