The major Canadian banks are notorious for having strict lending criteria. Private mortgage lenders in Port Hope are able to provide mortgages for people who have been rejected by banks. Many of these private lenders do not advertise to the public, and mainly find new clients via mortgage brokers. Private lenders are more flexible than banks and are able to offer both first and second mortgages.

Private mortgage lenders have approval criteria that are far more lenient than the major banks. Since these lenders face far less regulation than banks, they require less paperwork and can process mortgages more quickly. A private mortgage is typically used as a short term solution, and most borrowers later apply for a lower-rate mortgage with a bank. Since private mortgages can be arranged quickly, they are well suited as a source of emergency funding.

People have many different reasons for taking a private mortgage, some common reasons are:

  • You are buying a type of property banks cannot provide mortgages for
  • You cannot wait for the bank to process a mortgage
  • You have poor or bruised credit
  • You only need a short term mortgage
  • Your income is too low or is not accepted by banks

Benefits of Using a Broker for Private Mortgages

The job of a mortgage broker is to act as a middleman between borrowers and mortgage lenders. A good broker will take the time to understand your situation and find the best lenders that suit your needs. If you are looking for a private lender, you should consider using the services of a mortgage broker. Some of the benefits of using a broker’s services include:

  • Dealing with a government licensed professional
  • Can outline your different financial options
  • Will compare prices from different lenders to get you the best rate
  • Can explain all the required mortgage documents

Getting a private mortgage can be difficult, but a mortgage broker can make the entire process very simple.

Approval Criteria for Port Hope Private Lenders

In Port Hope, most private lenders can lend up to 70% of the value of the property. The mortgage is solely approved based on home equity and not on income or credit score. Private lenders focus on the property itself rather than the borrowers. Generally, properties in small towns like Port Hope are more difficult to get financing for than large cities. For this reason, private lenders can’t lend more than 75% of the value of a Port Hope property. This means that the total of all debts on the property, including the requested mortgage, cannot exceed 70% of the property’s appraised value. For all mortgages in Ontario, if the borrower does not make their mortgage payments, the lender has the legal right to evict the occupants and sell the property. In Ontario, the process of evicting and selling a property is called “Power of Sale” and can take 4 to 6 months to process. When a property is sold under power of sale, the mortgages are paid out in the same order in which they were placed on the property. Second mortgages are risky since a second mortgage lender can only recover their investment if there is money left over after the first mortgage is paid. For this reason, second mortgage lenders must make sure that they will be able to get their money back if the property is to be sold.

Rates and Fees Involved with a Port Hope Private Mortgage

Since private lenders deal with higher risk clients than banks, they charge more in interest and fees. A private mortgage lender will charge interest rates of 7% to 12% depending on the equity in the property. You can also expect to pay lender fees between 1% and 3% and broker fees between 1% and 3%. The lender and broker fees are typically included in the registered mortgage amount. Some lenders will also charge smaller upfront fees for administrative work or for an appraisal.