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Private Mortgage Lenders in Canada: Flexible Financing for Unique Needs
Traditional banks aren’t always the best fit for every borrower. That’s where private mortgage lenders step in, offering tailored solutions for Canadians with unconventional financial situations. Whether you need fast funding, have a low credit score, or are self-employed, private lenders provide the flexibility and speed you need to achieve your financial goals.
What Are Private Mortgage Lenders?
Private mortgage lenders are individuals, investment companies, or mortgage investment corporations (MICs) that provide loans secured against real estate. Unlike banks, private lenders focus less on your income and credit score and more on the equity in your property.
Key Benefits of Private Mortgage Lenders:
- Faster Approvals: Get funding in days, not weeks.
- Customized Loan Terms: Tailored repayment schedules that fit your needs.
- Access for All: Ideal for borrowers with poor credit, non-traditional income, or urgent financial requirements.
For more information on private lending, visit the Financial Consumer Agency of Canada (FCAC) to understand your rights as a borrower.
Using a mortgage broker from Citadel Mortgages can help you ensure you have some of the best mortgage rates and products.
Why Choose a Private Mortgage Lender?
Private lenders provide solutions that are often unavailable through traditional financial institutions. Here’s why you might consider a private mortgage:
Fast and Flexible Funding
Unlike banks, private lenders prioritize quick approvals and disbursements. Whether you’re consolidating debt or seizing an investment opportunity, funds can be available within 48 to 72 hours. Learn more about quick mortgage solutions from CMHC.Lenient Requirements
Private lenders cater to borrowers who don’t meet traditional lending criteria. If you’re self-employed, have a low credit score, or lack income verification, private lenders focus on your property’s equity instead.Customizable Loan Options
With private lenders, you can choose from various loan types, including bridge loans, second mortgages, and interest-only payments. Tailoring these to your specific financial needs ensures flexibility.
Mortgage Broker Rates in Canada
Comparing Private Mortgage Lenders
When considering private mortgage options, it’s crucial to compare offerings from various lenders. Below is a comparison of sample private mortgage rates and terms:
| Lender/Broker | 1st Mortgage Rate | 2nd Mortgage Rate | Maximum LTV | Lender Fees From |
|---|---|---|---|---|
| Butler Mortgage | 5.99% | 7.99% | 80% | 1% |
| Home Trust | 6.14% | 8.14% | 80% | 1% |
| Haventree Bank | 6.19% | 8.19% | 80% | 1% |
| RiverRock Investments Corp | 6.99% | 8.99% | 80% | 2% |
| Canadian Mortgages Inc | 7.99% | 9.99% | 85% | 2% |
| Westboro Investment | 8.79% | 10.79% | 80% | 3% |
| Private Lender Inc | 8.99% | 10.99% | 80% | 2% |
| Prudent Financial | 8.99% | 10.99% | 65% | Varies |
| Alpine Credits | 9.00% | 11.00% | 75% | Varies |
| VWR Capital | 9.95% | 11.95% | 75% | 1% (Open) or $750 (Closed) |
| Calvert Home Mortgage | 9.99% (6-month) | 11.99% | Inquire | Inquire |
| Sun Mortgage | 10.00% | 12.00% | 75% | 1.5% |
| Threshold Mortgage Corp | 12.00% | 14.00% | 75% | 3% |
| Guardian Financing | 13.00% | 15.00% | 75% | 2% |
Note: Rates are for informational purposes and may vary based on individual circumstances and lender policies.
As of 2024, private mortgage rates in Canada typically range from 5.99% to 13.00%, depending on various factors. For instance, first mortgages may start at 5.99%, while second mortgages can have rates beginning at 7.99% and higher.
Frequently Asked Questions About Private Mortgage Lenders
Yes, private lenders in Canada are regulated under provincial laws. Always ensure you work with a licensed professional. Visit FSRA Ontario to verify credentials.
Private mortgage rates are higher because private lenders take on more risk. They cater to borrowers who may not meet conventional lending criteria, such as those with poor credit or unverified income.
In addition to higher interest rates, private mortgages include several fees:
- Lender fees: 1% to 3% of the loan amount. Second Mortgage rates and fees are higher.
- Broker fees: 1% to 3%, depending on the complexity of the loan. Second Mortgage rates and fees are higher.
- Legal fees: $1,500 to $3,000.
- Appraisal fees: $300 to $500.
Private mortgages usually have shorter terms, ranging from 6 months to 1 year. At the end of the term, borrowers must either repay the loan or refinance.
Private mortgages have a faster approval process compared to traditional loans. In most cases, you can receive approval and funding within 48 to 72 hours after submitting the necessary documentation.
Factors That Influence Private Mortgage Rates
Several factors determine the interest rates you’ll be offered by a private lender:
Loan-to-Value Ratio (LTV)
Higher LTV ratios indicate more risk, often leading to higher interest rates. Learn more about LTV and how it impacts your loan on CMHC’s Loan-to-Value Guide.Property Type and Location
Urban properties generally attract lower rates due to higher market demand. Meanwhile, rural or niche properties may face higher interest costs.Borrower Profile
Although private lenders are flexible, your credit score and financial stability can still influence the interest rate you’re offered. For tips on improving your credit, visit Equifax Canada.Term Length and Payment Structure
Shorter loan terms or interest-only payments might have different rates. It’s crucial to understand how these affect your overall repayment.
How to Find the Best Private Mortgage Lender
Choosing the right private mortgage lender can be overwhelming. Here are some tips:
- Compare Rates and Fees: Always compare offers from multiple lenders to find competitive rates.
- Consult a Mortgage Broker: Brokers have access to a wide network of private lenders and can help you find the best deal.
- Verify Credentials: Ensure your lender is licensed and reputable. Visit FSRA Ontario for a list of registered lenders.
Final Thoughts
Private mortgage lenders offer invaluable flexibility and speed for Canadian borrowers with unique financial needs. Whether you’re consolidating debt, funding a project, or navigating financial challenges, private lenders provide a viable solution. Always compare lenders, understand the terms, and consult with professionals to ensure you make the best decision.
See our private 1st & 2nd mortgage calculator and see how much you can be approved for today!