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For many real estate investors or owner-occupiers, private mortgage lenders in Toronto are a growing trend. If you are looking to invest in Toronto real estate, there are a number of opportunities available to you, as the market is diverse in nature. The increasingly strict lending requirements that conventional banks are applying to borrowers have made traditional mortgages harder to come by. While many banks are starting to ease those restrictions slightly, because of declining revenues in their mortgage wings, it is still quite difficult to secure a conventional mortgage if you do not have stellar credit, a hefty down payment and a stable employment history. Private mortgage lending is one solution that some borrowers are turning to.
Private mortgage lending in Toronto
Generally, there are two types of borrowers who ask for private lending in Toronto: people looking for a owner-occupied residential situation but who fail to qualify for a conventional mortgage, and investors or purchasers seeing a fast turnaround on financing. Because many private lenders want their money back within six months to a year, though, you want to make sure you have a plan in place to satisfy the balance on time.
Difference between private mortgage and private lender
The term “private mortgage” or “private lender” can be confusing. However, the process is actually fairly simple. Instead of taking out a mortgage or other loan from a conventional bank or other lender, you are getting your money from a private investor or a private company specializing in lending. This could be a family member or someone you don’t know yet. No matter who the private lender is, you need to set up an agreement and keep to it, because the loan is just as binding as one you would set up with a bank. It is generally faster and easier to apply for private mortgages, but the shorter term is definitely a drawback. Also, the interest rate on a private loan is going to be higher, because you represent more of a risk (or need the money more quickly).
Private mortgage in Toronto
If you are looking for a private mortgage in Toronto, but you don’t have access to a family member or friend with the money to help you out, Amansad Financial has connections with lenders looking to invest in properties like the one you are considering purchasing. Once Amansad Financial connects you with a private lender, the two of you negotiate the conditions and terms of the loan. You’ll determine the down payment, length of the loan, and the interest rate, as well as the number of points you’ll have to pay as a loan origination fee. Once all of the paperwork is in place, you sign an agreement to pay the mortgage according to the terms you have negotiated. This can be an opportunity for you to rebuild your credit so that you can qualify for a conventional mortgage and refinance later for a lower rate. The lender will not care, because he will have his money back, even if it’s from a third party. If you ask your private lender to report your payments to the credit bureaus, this will help your score (assuming that you make them on time), and you will have an easier time getting credit for home, automobile and other purchases.
Talk to one of the professionals at Amansad Financial today to get started with your own private loan. We have connected many homeowners and investors with the funding they need, and we can help you too.