Why Homeowners are Choosing Private Lenders for Second Mortgages in Canada

second mortgage loans

Homeowners who are considering applying for second mortgages in Canada are turning to private lenders lately, especially when the stricter rules on home mortgage loans were released recently. A recent report showed that there was a sharp increase in the number of homeowners applying for the second mortgage with private lenders especially in the Greater Toronto Area.

 

One reason behind this is that one of the newer rules regarding mortgages in Canada is that it limits the amount of money that can be borrowed with the exception of those who will be renewing their current mortgage with the same lender. What this means is that those who are turning to private lenders when they need refinancing are those who need to add to their current mortgage.

 

Who are Private Lenders?

 

Private lenders can be individuals who are willing to loan their money or are investment corporations that pool together capital from their investors. These lenders don’t accept deposits from their customers which means that they are not included in the stricter mortgage rules being implemented today in Canada. This lets them accept more risky loans.

Why Use a Private Mortgage Lender?

Applying for second mortgages can be tough at times especially when you will be borrowing from banks as they may not be too keen on lending you money if your credit history isn’t up to par. This can be one of the reasons why homeowners consider borrowing from a private mortgage lender instead.

 

Why use a private mortgage lender for your home mortgage loans? Here are a few reasons why.

 

  • You wish to purchase a property that your bank is not willing to finance.
  • You have a bad credit history that is not up to standards with conventional mortgage lenders.
  • You have a source of income that cannot be confirmed causing your regular mortgage application to be turned down by banks and prime lenders.
  • You only need a short-term loan to tide you over.

Mortgage Rates to Expect!

The interest rates for mortgages when applying to a private mortgage lender can range from 10 to 18% depending on the current economy, your property, as well as the borrower. Since the rates offered by private lenders are higher than that of banks, you should only consider this option if your application was declined.

 Apply now for our second mortgage loans in Canada!

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