If you’re brand new to the mortgage lending process, the term “private lending” might be new to you. Most property owners and first-time home buyers in Saskatchewan think that the only place you can get a mortgage is a bank, or maybe a mortgage broker. However, the industry serving borrowers is much bigger and has many more options — including private lending.
You probably already knew this, but just to be clear — a “mortgage” is a loan that real property secures. The mortgage contract, or note, indicates that you have taken out money and used the real property as the security in case of default. For most people, the payment they make on their mortgage each month is the largest payment, and the real property that they buy constitutes the single largest investment that they will make.
Private Lenders In Saskatchewan Serve Borrowers
Private Lenders help Borrowers who have the means to afford but who lack some of the documentation that the banks require in order to approve a traditional mortgage. Some people have gone through credit problems in the past that have their score too low; others have difficulty with income verification, either because they have changed employers several times in the past few years, or they work for themselves, and so there is no third-party verification for their income claims.
So when you approach a private lender, that entity knows that you will have some element(s) of your lending application that are not in line with what the banks want to see. The key factors for a private lender are the location and the loan to value. That is why you should expect to have at 25% – 35% equity in the property or greater when refinancing, and 25% down payment or greater when purchasing a property. If you don’t have the required equity or down payment; both of these can be reduced provided there’s additional real estate security available. When a property is outside of a major centre (or direct surrounding area); expect the equity/down payment to be greater. Current market conditions come into play.
Why do you have to make a higher down payment out in the country?
In the event of a mortgage default, a Private Lender prefers for a property owner to get another chance of redemption and refinance with a new private lender. If there isn’t enough equity, then the Private Lenders in Saskatchewan have no option but to proceed with foreclosure. If that route is taken, you would likely take longer to sell your house which will accompany legal costs that easily exceed $10,000. In addition, the price would likely not sell for the same dollar… especially with a foreclosure registered on the property. No sensible buyer will offer market value when they know the property owner is under some type of financial hardship. In urban centers, it is easier to sell properties more quickly.
You can expect to pay a higher interest rate for a private loan that you would through a bank, often starting at 10 percent. However, you should also expect a shorter term, something along the lines of a year or two. The idea is that you take the time to improve your credit, or solidify your income, so that you can get secure bank approval before the term expires, and then you can get a better interest rate before our mortgage matures.
In Saskatchewan, you should expect to pay higher Private Lender Loan fees as compared to other provinces. One reason for this has to do with law regarding the Saskatchewan Foreclosure Process, which takes longer to resolve. The higher fees help the private lender absorb the risk of delayed repayment in case things have to go to foreclosure. While the lender can recover the vast majority of costs through the foreclosure process, that’s not true about all of the fees, which is why the risk gets passed onto the borrower.
Private Lenders Serving Saskatchewan – Urban Centers Vs Rural
If you’re interested in living in one of Saskatchewan’s urban areas — Saskatoon, Regina, Moosejaw, North Battleford, Yorkton, Swift Current, Estevan, Weyburn, and Lloydminster, for example — your chances of approval with a private loan are higher. However, you can often get approval in a more outlying area; our lending network considers those applications on an individual basis, and depending on the current market conditions.
Taking Out A Second Mortgage In Saskatchewan
If you think about it, if you’ve been paying on your mortgage for a number of years, you’ve been basically turning your house into a giant savings account. As long as you have plenty of money coming in from other sources, you don’t ever have to tap that savings account. For some people, they only need one loan for their home, as they have put aside savings for such things as their children’s tuition and they may not run into any unforeseen circumstances, such as the loss of a job or a chance to get a great deal on newly available real estate.
For a lot of people, though, financial circumstances arise that make a second mortgage a good idea. If you have an unexpected large expense come up, it would make sense to use a high interest credit card or an unsecured loan before taking out a second mortgage. A Private Second Mortgage is easy, convenient, but should only be explored if all other options have been looked at.
There is a psychological barrier that some people face when it comes to taking out a second mortgage. They think that their house is supposed to be their first priority – which is the truth. You don’t want to take out a second mortgage if there’s a chance you’ll default on it, because you’ll end up in foreclosure proceedings. However, if you’re taking out a loan that you already know you can pay back on the basis of your budget, then why not take out a loan that costs you the least over time?
In Saskatchewan, Amansad Financial underwrites mortgage loan applications for a large network of Direct Private Lender Partners that are ready to assist. You might think that all banks are pretty much the same – a lot of our clients come to us thinking that. However, banks aren’t even the only type of entity that provides mortgages. If you have pristine credit, then you’ll probably get the best interest rate through a bank. However, that’s not always the case, especially if you’re self-employed. In cases involving self-employment, or in cases that involve credit that is less than perfect, private lenders can often provide you with the best deal for your situation.
Get in touch with us if you are considering private lending towards obtaining home ownership, refinancing an existing mortgage, taking out a second mortgage on your home, taking out equity from an investment property, or if you have a significant financial expenditure coming up that you’re not sure how you can afford. We have even helped people take out debt consolidation mortgages to settle their consumer debt and pay themselves back at a much lower interest thanks to the equity in their homes. Take us through your current situation and let us put together a proposal that will help you get the money you deserve quickly.
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Amansad Financial Services | 2nd Floor, 5303 91st, Edmonton, AB T6E 6E2