Top 5 Benefits of Using Private Mortgage Lenders

Private mortgage lenders are gaining popularity in Ontario, offering a lifeline for homeowners and buyers who find themselves shut out by traditional banks. 

Imagine the frustration of having a steady income, but not being able to prove it, or having your mortgage application rejected due to a less-than-perfect credit score. That’s where private mortgage lenders come in, due to their appealing policy that entails looking beyond the numbers.

In this blog, we will explain what private mortgages are all about, the reason for their latest traction, and the top five reasons why they are becoming a go-to option for Ontario residents.

What is a private mortgage lender and who needs one?

A private mortgage lender is a non-banking entity that can be an individual or organization that offers mortgage financing with more flexible terms than traditional banks.

Unlike these banks, private mortgage lenders or private money lenders for real estate do not rely solely on credit scores or income verification to approve mortgage loans. Instead, they evaluate a borrower’s financial situation and provide viable options.

These lenders cater to specific demographics, such as people who struggle with banking requirements, including irregular or unverified income, credit scores, or those interested in purchasing “non-comforming” properties that may fall outside the coverage lending guidelines.

There have been great testimonials and growing acceptance of these lenders' viable solutions. This coincides with last year’s Residential Mortgage Industry Report, which detailed that private mortgages financed nearly 12% of all mortgages in Canada, thus highlighting the growing importance of these lenders in our housing market.

Below, we outline and discuss the top five benefits of private mortgage lenders or private home loan lenders. 

1. Flexible income requirement

Flexible income requirements are arguably the biggest benefit of private mortgage lenders. Due to government policies, banks often demand strict documents like pay stubs and tax returns. These lenders do not, which is helpful for self-employed individuals, freelancers, or those with irregular income streams.

As mentioned earlier, private lenders also look beyond just numbers and paperwork. They consider the bigger financial picture, such as assets owned and property equity, and provide a personalized lending option.

For example, if you are a small business owner with a fluctuating monthly income, but strong annual earnings, or you earn commissions, then private mortgage lenders can provide stability and secure the mortgage you need.

This approach is valuable today, as more people are choosing to start a business or take up gig jobs. With private mortgage lenders, a large pool of borrowers can fulfill a lifelong dream of purchasing their dream home without constraints.

2. Minimum credit score issues

Most banks in Ontario consider a credit score below 620 as low, while scores above 700 are seen as good to excellent. Unfortunately, many people fall below these numbers due to various reasons, such as past financial struggles, missed payments, or even high debt levels.

Borrowers with these low scores are seen as high risks and may not be able to secure a mortgage or refinance an existing one, especially when building credit. 

Private mortgage lenders always look beyond your credit score and consider other factors such as property equity, annual income, and financial stability. Through these alternative factors, private lenders provide a second chance to those who might otherwise be shut out of the housing market, thus leaving the door open for homeownership and room for individuals to regain their financial footing.

3. Financing for unique properties

Banks try to shy away from financing “non-conforming” properties, which include homes in rural areas, mixed-use buildings, or even properties that are under renovation. These properties don’t fit the standard criteria that banks prefer, making it challenging for buyers to obtain funding. 

Fortunately, this is not the case with private mortgage lenders or private home loan lenders. These lenders are willing to assess the unique aspect of the property.

For instance, they can provide financing for a mixed-use building where the owner lives in one part and operates a business in another, or for homes in remote rural locations that don't meet conventional lending requirements. 

Private mortgage lenders are also open to fund properties that are under renovation, thus allowing homeowners to improve their property without the stress of waiting for a traditional loan.

Financing options like these ensure that you are not left without choices when the bank says “no.”

4. Faster approvals

Now, let’s imagine that you are in a tight spot, and every moment counts. In such a case, you would need the faster and simpler mortgage approval process that private mortgage lenders offer.

Banks, which are supposed to be the go-to source for support, can bog you down with loads of paperwork, including extensive income verification, proof of employment, credit histories, and much more. Sometimes, you might be asked to provide tax returns and detailed assessments of assets and liabilities owned.

In contrast, private lenders focus on what truly matters—you. They require fewer documents, such as a simple income statement and identification. This means that instead of waiting for weeks for a decision, you could have cash in your hands within days. 

The speed of mortgage processing can be a lifesaver for those with emergencies or who are avoiding a power-of-sale situation.

5. Debt consolidation

Before you decide to purchase a home, you may have some debts to manage. Private mortgage lenders can clear an easy pathway for you to walk through. 

These lenders offer debt consolidation, a feature that allows borrowers to combine different debts, such as tax arrears, credit card bills, and other outstanding debt, into one single mortgage. This means you won’t have to keep track of several payments each month; instead, you can focus on just one.

By consolidating your debt through a private mortgage, you can lower your monthly payments by as much as 50%, making it easier to manage your budget and keep your finances in check.

This approach can also help you avoid serious issues like foreclosure. When you consolidate your debts, you reduce the risk of falling behind on payments, which can lead to losing your home.

Private mortgage lenders understand the urgency of your situation and are here to help. With one simple payment and less financial stress, you can work toward regaining control of your finances.

We Will Help You Find the Perfect Home

Financial issues can make the search for a mortgage daunting. However, that should no longer be a worry of the present. Working with some of Ontario’s top private mortgage lenders, Canadalend offers the right options. We take the time to understand your situation and provide a fitting solution.

Whether you are recovering from bankruptcy, struggling with credit management, or unable to prove your income through traditional means, we provide guidance to help you regain financial stability. We can assist with arrears on income tax, property tax, bills, or mortgages, alleviating some of the stress that comes with financial difficulties.

Is private lending for you?

Private mortgage lending is becoming popular in Canada’s housing market. These lenders provide flexible options, faster approvals, and a personal touch, making them a great choice for anyone facing income verification issues or credit problems. 

If you need quick financing to buy your dream home or renovate your current one, Canadalend could be the solution you’re looking for. 

Our customized mortgage options are designed to fit your financial situation. With us, you are more than just a number; you are a valued client, which is why we are committed to helping you achieve your homeownership goals! 

For more information about our private mortgage lenders, call us at 1-844-586-0713 or contact us online to obtain the best rates and terms today.