Canada’s stricter mortgage rules may force you, as a homeowner, to borrow from private or alternative lenders.
Private mortgages not only fill the void of institutional lenders, but they also offer clients a lot of flexibility in mortgage lending.
Private lenders are not subject to the stricter rules that are governing banks and credit unions. While Credit Unions, which are provincially regulated, aren’t bound by Ottawa’s federal mortgage rules, many of them appear to be voluntarily complying by the new guidelines.
This means that private lenders are often the only option for borrowers who don’t qualify for a loan under the stricter regulations.
As a brokerage, we have access to Banks, Credit Unions, Monoline Lenders, Alternative Lenders as well as Private Lenders. This extensive network allows us to ensure that you are not only getting the sharpest rate, but the mortgage product is also aligned with your needs.
Private lending is the perfect option when your income or credit may not fit the ‘bank box’. We are problem-solvers, advisors and honourable individuals. We work hard to make your dreams possible.
What is a private mortgage loan?
Private mortgages are short-term, interest-only loans, typically for a 1 year term (2 year terms can be requested for a slightly higher rate). Interest only loans do not require homeowners to pay the mortgage principal down and instead only require interest payments each month. Private lenders take into account a property’s overall value and marketability as opposed to simply the borrower’s credit history.
What fees are associated with a private mortgage loan?
With a conventional lender, the broker is paid a commission directly from the lender. When using a private lender, you (the borrower), pay the broker and lender fees. Private mortgages also incur legal fees to set-up and register the new mortgage which are also at the borrower’s expense. There are two lawyers/notaries involved, one representing the borrower, and the other representing the lender. The good news is that these fees can be financed through the mortgage, and deducted from the proceeds.
Click here to download our Private Financing Step-by-Step Guide
- Broker gets quotes
- Once quotes have been approved, your broker will get the formal approval in place
- Broker will order appraisal at Client’s expense ($325—$500)
- Finalize any other outstanding conditions
- Financing has been finalized
- Good Faith deposit to Lender’s Lawyer
- Sign with your lawyer to finalize the paperwork
- The mortgage will be funded and registered.