Great Private Lending Questions
If you are trying to take out a mortgage to buy that new house or simply needing to consolidate debt, but you’re having a hard time getting financing from a traditional lender; private lending is a great short term solution to get the financing.
FAQ QUESTIONS
Take a look at these great common private lending questions.
1. What is a Prequalification?
Answer: A Prequalification allows you to find out if you may be eligible for a Mortgage without impacting your credit score. If a quote is provided, and it’s acceptable to you, you can proceed with the a Formal Application.
2. What is the contract interest rate?
Answer: The Contract Interest Rates will vary depending on a variety of factors. Please Contact Us for more info regarding your situation.
3. Are there any upfront fees?
Answer: There are no upfront Brokerage, Lender Fees, or Lender Legal Fees on Residential private mortgages. (Some exceptions apply)
Commercial Mortgages will have a non-refundable Retainer/Application “Working Fee” after a LOE (Letter of Engagement) has been signed and returned.
4. What is the Loan-to-Value (LTV) that you can finance against a property?
Answer: Below is a general recap of the LTV ranges (Exceptions do apply):
- Urban Residential Properties – 65% – 80% LTV*
- Urban Commercial Properties – 55% – 65%*
- Urban Land – 45% – 55%*
- Agricultural/Farm – 65% – 75%
Note: Rural & Properties outside of Urban areas may be subject to lower LTVs.
5. How much down payment is required?
- For a Residential Urban Properties are 20% or greater plus fees and closing costs.
- For a Residential Acreage Properties are 30% or greater plus fees and closing costs.
- Raw Land, Farm Land, Commercial Property, and other property types will vary depending on the application details.
- Down payment can be reduced by using a second property. This is a referred to as an Inter Alia/Blanket Mortgage.
6. What are the pre-payment penalties?
Answer: Pre-payment penalties vary depending on the type of deal and the objective, but the common industry standard on closed mortgages is 3-months interest pre-payment, or a fixed percentage of original registered principal amount. Some provide open or partially open options.
7. What are the fees associated with getting a private mortgage?
Answer: The Brokerage Fees will vary depending on the loan size and the specifics of the loan application. Jumbo Loans of $1,000,000 or greater the fees are generally 1.5% – 2% of the loan amount. Mid Size Loans of $500,000 are generally 2.0% – 2.5%. The smaller the loan, the higher the fee percentage. The file complexity impacts the fee.
Other Standard Mortgage Costs:
- Lender Fees generally range between 0% – 2% of the loan amount.
- Lender Legal Fees generally start at $2000 + disbursements and tax; but vary depending on each mortgage and complexity
- Title Insurance on standard residential starts at $500 +tax; but will vary depending on each mortgage and complexity.
- Appraisal and/or Home Inspection start at $300 + tax; but will vary depending on each mortgage and complexity – paid directly to the company.
Please note:
The Borrower Legal Fees are the responsibility of the Borrower. This can be paid directly to chosen lawyer OR deducted from new mortgage funds.
8. What are my options at the end of the term?
Answer: As a property owner, it is your responsibility to put yourself in the best position possible to transition away from private financing. When your maturity date is coming up, you will essentially have the following potential options if you don’t intend to sell you property:
- Renew with the Same Lender
- Refinance with the Same Lender
- Refinance with a New Private Lender
- Refinance with a Semi-Traditional (B-Lender)
- Refinance with a Bank/Traditional Lender
Note: All the above are subject to Lender Approval.
9. If I don’t have enough equity in my property, do I still have options?
Answer: The options when property is lacking are few, but there are options. If the property is in an urban center or direct surrounding area and there is 10%-15% equity, the options would be as follows:
- Provide some cash injection to meet a private lender’s criteria for the loan to value requirements.
- If other property is owned where there is adequate equity, a blanket mortgage can be considered.
- Sell your property. If the equity is less than 10%, the suggestion is to simply sell your home if you are in a foreclosure situation. (Refinance Situations)
- Enter in to Rent-to-Own Refinance program. This is when an investor purchases the property from the property owner. A separate agreement is also prepared by both parties with the intention of the home being purchased back at a predetermined date.
10. What is the advantage of using private lending brokerage over a direct private lender?
Answer: Looking for direct private lenders can be time consuming. If a direct private lender is found, it is possible that they may not be regulated by their provincial body. Mortgage Brokerages are regulated. The most common ways our Brokerage is able to assist is as follows:
-
- Amansad Direct Lending Group’s network of Individual Private Lenders (IPLs)
- MIC (Mortgage Investment Corporation) Partners.
- MIE (Mortgage Investment Entities) Partners.
- Amansad Direct Lending Group Approved syndicated Private Lender Groups.
- Amansad Direct Lending Group approved Rent-to-Own Facilitators.
In the event you are looking for a Bank/Semi-Traditional mortgage, we can direct or refer you after an assessment has been completed.
11. How long does the process take?
Answer: Provided there are no delays, the entire process can be completed in less than 2 weeks. Commercial files can generally be completed in 4 – 8 weeks
12. What documentation will I need to provide?
Answer: A standard application will require the following:
- 2 Pieces of ID (1 Photo)
- Most Recent Bank Statement(s)
- Property Tax Statement(s)
- Mortgage Statement(s)
- Employment Letter a/o Paystub
- Most Recent Notice of Assessment
- Property Insurance
- Appraisal (Brokerage/Lender ordered)
Note: Our Brokerage completes 3rd Party Digital ID, Banking, and CRA Verification.
13. If I own other real estate, can I use as it as additional security to get the mortgage loan?
Answer: YES. This is referred to as a Blanket Mortgage.
14. Are payments interest only OR principal and interest?
Answer: Most Private Lenders provide interest only. Principal and Interest may be available on a case-by-case basis. No-payment mortgages may also available where payment are pre-factored into the mortgage or due on maturity.
15. What are the steps in obtaining a private mortgage with your company?
Answer: Below is the easy and simple process after receiving a quote.
- Complete Secure Application & Consent Forms
- Complete Regulatory Compliance ID Verification
- Confirm Secure Application Details
- Provide Supporting Documents – A Secure Upload Link will be provided
- Appraisal (Must be Ordered by Brokerage/Lender) & Complete Secondary Digital ID, Fraud, and PEP AML Verification
- Sign Conditional Approval Documents
- Sign Mortgage Registration Documents with Your Lawyer
- Complete
16. Can extra payments be made towards the mortgage without penalty?
Answer:
Yes, on a case-by-case basis. Some of our Individual Lender Partners will allow additional payments can be made towards the principal.
The mortgage is closed, but can be paid out in full anytime. Prepayment Fees are dependant on when the mortgage is paid out and the terms of the mortgage.
17. What is the minimum and maximum loan size that will be considered?
Answer:
The general loan minimum is $30,000; depending on the details of the loan request and total combined loan-to-value. In some cases, a smaller loan amount may be considered.
There is no maximum loan amount. We have a wide variety of Investor/Lender partners that are able to cater to jumbo sized loans. In some cases, the timing of the loan request determines the availability.
18. What is the minimum and maximum property value that will be considered?
Answer:
The general property value minimum is $200,000 depending on the details of the loan request. In some cases, lesser amount may be considered it the request makes sense and/or if there is other real estate collateral.
There is no maximum property value.
19. Where are your offices located?
Answer:
Amansad Direct Lending Group is an E-Commerce Brokerage with Registered Offices in BC, Alberta, Saskatchewan, Ontario, and Manitoba.
- 2500, 10123 99st NW Edmonton AB T5J 3H1
- 202, 1433 St.Paul St. Kelowna BC V1Y 2E4
- 200, 4500 2nd Ave Saskatoon SK S7K 2C3
- 660, 1600 Carling Ave Ottawa ON K1Z 1G3
- 2200 – 201 Portage Avenue Winnipeg MB
20. What does APR mean?
Answer:
APR means Annual Percentage Rate. It represents all the costs related to loan over the course of a year. It essentially the total interest costs and applicable fees. An APR provides a true cost of a loan. There are however some fees that are excluded from the APR calculation. See https://amansadfinancial.
21. Is an appraisal required to get a mortgage with your Brokerage?
Answer:
Yes, nearly 100% of the time. Appraisals are ordered by the Brokerage or the Lender. The cost of the appraisal is the responsibility of the Borrower(s) and it is paid directly to the appraisal company. Prior to applying, and for your own information purposes, you can contact a Realtor for a CMA (Comparative Market Analysis).
22. What type of properties are considered?
Answer:
All properties are considered with exception of Crown Land. The more marketable the property, the more desirable it is to lend on. The overall condition of the property is a key factor.
23. Can I get a private mortgage with your company if I owe taxes?
Answer:
The short answer is YES. If taxes are owing they will need to be paid out using the new mortgage funds. Taxes consist of Municipal/Property Taxes of the property, Personal Tax, and Corporate/Business Tax.
24. What are some reasons to obtain a private mortgage?
Answer:
Below is list of common reasons why a private mortgage is requested:
- Purchase
- Refinance
- Equity Take Out/2nd Mortgages
- Foreclosure Refinancing
- Non-Renewal Refinance
- Credit Challenges, Bad Credit or Lack of Credit
- Payout out Consumer Proposal or Orderly Payment of Debts
- Paying out Canada Revenue Agency Tax Arrears
- Bankruptcy Annulment refinancing
- Post Bankruptcy Financing
- Paying out Collections, Judgements, Writs on Title
- Home Improvements
- Self-Employed, Non-Traditional Income Challenges
- Financing using a Holding Company or Corporation
- Spousal Buyout
- Alternative Reverse Mortgage up to 40% LTV (No Age Restrictions)
- Renovation/Flip
- Bridge Financing
- Financing for Multiple Properties
- Real Estate Backed Secured Inheritance Loans
- Real Estate Backed Secured Settlement Loans
And more…
25. What is the best way to contact your company?
Answer:
If you are a first time customer please use Contact Us found on the website. Once completed, you will receive an instant email from Admin. All Unknown/New Calls will go to voicemail and a text message will be sent with instructions. There are 3 primary reasons for this.
- Customer & Client Screening to avoid Spam, Scam & Robo Calls.
- Efficiency – We cannot speak to all customers through the day, but all web inquiries are replied to within 1 business day.
- Time Management
5 Steps To Success With Private Lending
If you’re going to obtain some private lending, you’re starting a relationship that will work a little differently than what you can expect from a bank or other traditional lender. Let’s take a look at some of the key differences, so you’ll know what you have in store.
Repayment History
Most people obtain private lending as a solution to get started on home ownership while they’re still repairing their credit. Private Lending is short term (often one to two years) and commonly allow for interest-only payments. Private lenders do not have to renew mortgages when the term expires, so you want to keep your options open by making your repayments on time.
Employment Changes
If you change employers during the term of a private mortgage, there are no requirements mandating that you update that information. However if you do provide that update, you strengthen your relationship with the private lender, showing that you are serious about bettering your financial situation. Even if you haven’t notified your private lender of the change, that may be a requirement for extending or renewing the loan.
Improving Your Credit
If you took out a private mortgage while you intended to improve your credit, there are improvement counselors who can help you get that score up. The purpose of this is to help you qualify for a bank loan when the private lending mortgage term expires – which will save you tens of thousands of dollars over the amortization of the entire mortgage.
Obtaining New Credit
Try to avoid opening new lines of credit, and keep your credit inquiries to a minimum during the term of your private mortgage loan. These activities can affect your score adversely, which definitely will not help you when it’s time to shift from private lending to a traditional lender.
The Value of Communication
Remember – a private lender is entrusting you with a great deal of capital. The clearer your communication is, the stronger your relationship will be. Private lenders are much more willing to work with borrowers who are honest and upfront.
NEED MORTGAGE FINANCE, REFINANCING,
OR A SECURED ASSET LOAN?
✔ Same Day Response
✔ Fast, Efficient, & Friendly Service
✔ Private Mortgages are based primarily on Equity and the Property
✔ Bad Credit Mortgages are based primarily on Equity and the Property
✔ Traditional & Semi-Traditional Options also available
✔ Equity Based Secured Asset Loans
(The world moves FAST, RESPECTING your time is important.)
Amansad Direct Lending Group