4 Benefits of Private Mortgage Lenders

When it comes to purchasing a house, unless you have enough saved up to buy the property outright, you are going to need to take out a mortgage loan to cover the difference between the amount you have available to put down and the total cost of the home.

Whether you are looking to purchase property for the first time or have gone through this process before, you may be surprised to learn that various types of lenders are available to secure this kind of loan.

When most people consider mortgage loans, they tend to think of prime or subprime lenders, such as big banks and credit unions. However, while such lenders offer better interest rates, they usually have more stringent requirements for loan approvals. These relate to matters such as your credit score and employment.

If you have the money for a down payment, but you cannot qualify for a loan from a prime or subprime lender because of their qualifying factors, it is also possible to get your mortgage through a private lender.

Private lenders can be individuals, syndicates, or corporations. They set their own terms and conditions, since they are not regulated in the same way that financial institutions are.

Securing a mortgage through a private lender is generally a short-term solution, as the mortgages that private lenders issue come with much higher interest rates and shorter terms, ranging from 3 months to 2 years.

The Advantages of a Private Mortgage Lender

Although the higher interest rates of a mortgage loan through a private lender may not be ideal, there are a number of different ways that you can benefit from going the private mortgage loan route.

This type of mortgage loan is especially well-suited for people in certain circumstances, and can prove to be advantageous for various reasons.

1. Easier approval criteria

When it comes to loan qualifying requirements, private lenders in Ontario are significantly more flexible and less strict than traditional lenders. They are much more lenient with regard to factors such as your credit score, income verification, and financial history.

If you are self-employed, have inconsistent income, or have a blemished credit record, this flexibility can be particularly beneficial to you. In general, private lenders mostly just want to see that you have sufficient equity, enough cash for payments, and a good exit strategy in place.

With a smaller list of requirements, it is easier to get your mortgage loan approved. As long as you have proof of the few things that your private lender wants to see, getting approved should not be an issue.

2. A speedy approval process

Another benefit of dealing with a private mortgage lender is the speed of the approval process. This is substantially faster than it would be if you were going through a traditional lender, like a bank.

Private lenders can approve and fund loans at a much faster pace. This is especially advantageous in competitive real estate markets where timing is crucial, as rapidly securing financing could make the difference between winning or losing a bid on a property.

Private lenders in Ontario provide quicker decision-making and faster access to funds because they operate with streamlined procedures and fewer bureaucratic hurdles. This faster approval process can be particularly valuable to borrowers who need to act swiftly, such as those who are looking to capitalize on investment opportunities.

3. A higher degree of loan term flexibility and personalization

Another advantage of choosing a private mortgage lender is gaining access to a higher degree of flexibility and personalization for your loan terms. When dealing with a private lender, you have more room to negotiate terms that align with your specific needs, such as the loan amount, repayment schedule, and interest rates.

This personalization can even extend to the structure of the loan itself, as private lenders in Ontario are often willing to tailor their offerings to accommodate unique financial circumstances or investment strategies.

For instance, a private lender may be willing to set you up with an interest-only loan, bridge loan, or other specialized financing options you would not typically get from most traditional lenders. When you have unconventional financing needs, this level of customization and flexibility can be especially advantageous.

4. A viable temporary solution

Finally, getting a loan from a private lender can be a perfectly viable temporary financing option when you have limited other options available. Whether you are facing temporary financial challenges or need short-term financing to bridge a gap until you can secure a conventional loan, private mortgages can be an ideal solution.

With a short-term loan from a private lender, you can access the necessary capital to purchase the property you want to refinance with a traditional lender once your financial situation stabilizes or improves. This prevents you from having to put off your real estate or financial goals.

Plus, taking out a loan from a private lender and paying it off in time could help improve your financial history and credit score. Showing a positive track record of paying off your debt, even if it is for just 12 months, could make the difference in getting loan approval from a prime or subprime lender once your private loan term ends.

How Canadalend Can Help You Secure a Mortgage

If you want to purchase property, but are worried about all the obstacles of applying for a loan through a traditional lender, and you want to find private lenders in Ontario to take advantage of the private loan benefits mentioned above, Canadalend can help!

We network with a large assortment of private investors and lenders who can help you secure private mortgage financing. Our team of finance experts would be happy to set you up with the best possible option on the market to ease your financial stress and bring you closer to buying the home you want.

When you work with us to secure a private mortgage loan, one of our lending specialists will help you set up an appointment for a free personal consultation. This will allow us to better advise and guide you based on your unique needs and financial situation.

For more information about how we can set you up with private lenders in Ontario, or to learn about the range of our other mortgage solutions, call Canadalend at 1-844-586-0713 or contact us here.