There is no question that areas within Greater Toronto and the GTA are very popular places to call home. Newmarket is no exception. Sitting on the banks of the Holland River within a short commute to downtown Toronto, Newmarket offers a more relaxed suburban lifestyle with all the big city perks. Plenty of parks, cafes, and boutiques are within access to those that live in the area.
Newmarket has a population of 84,224 as of the last census in 2016. With local amenities, a highly educated workforce, and all the advantages of living within a major metropolitan area, Newmarket remains an attractive place to live.
Real estate numbers reflect the desirability of the Newmarket area. With impressive property appreciation throughout 2020 and into the second half of 2021, the Newmarket housing market remains robust despite the prolonged Covid-19 pandemic that we are still recovering from.
According to the July Newmarket Housing Report, the average price of a single, detached property has increased to 1.1 Million. This represents an appreciation of 6.1% since June 2021 and a whopping 31% year-over-year increase from July 2020.
These housing numbers serve as an incentive for some to apply for mortgage financing. Existing homeowners have the added advantage of tapping into the equity that has built up in their property to utilize in the form of a second mortgage loan.
Taking advantage of the robust GTA housing market may be an enticing idea, however, what options are open to those homeowners that may have poor credit? Although the banks may routinely turn down second mortgage financing to those homeowners with damaged credit, well-established private lenders are available in the Newmarket area to help negotiate private second mortgage options to help fill the economic gap.
How are Private Mortgage Loans Structured?
While the banks routinely put homeowners/borrowers through very structured mortgage stress tests in order to qualify for mortgage loans and refinancing, other lenders are available throughout Ontario and in the Newmarket area.
Instead of relying on exemplary credit scores, substantial and easy-to-calculate household income, private lenders (referred to as C lenders in the mortgage industry) are able to look beyond this narrow approval criteria and consider other variables when determining mortgage terms and amounts.
Mortgage Broker Store can help to directly negotiate second mortgage loans by looking at your overall, unique financial picture. With access to a broad network of Ontario-based private lending options, Mortgage Broker Store is in the position to direct you to an appropriate private lender who will be able to negotiate suitable terms on a private mortgage loan.
There are different second mortgage loans available to choose from depending on your specific refinancing needs. Regardless of the type of mortgage loan you determine best meets your mortgage objectives, there are several features of private mortgage loans that determine how they are structured including:
- Private mortgage financing is on a short-term basis - This is very appealing for those that require to refinance and take out a second mortgage loan option for a shorter time period providing both immediate financing and a long enough to help to restore credit if the loan is paid on-time and in-full for the course of the loan term. Most Private mortgage loans terms are between 6 months to 3 years.
- Private loans are negotiated quickly, and the process is straightforward - While the banks tend to take up to a number of weeks to process mortgage loan applications, private mortgage finance can be negotiated in a matter of days. Most second mortgage loans are processed within 1 to 4 days. This is very appealing for those that require immediate refinancing.
- There are different secured private mortgage loan options: Debt Consolidation Loans, Home Renovation Loans, Home Equity Line of Credit (HELOC), Home Equity Loans, or primary mortgage refinancing.
What Criteria are used to Calculate a Private Mortgage Loan?
There are several key areas that private lenders will focus on when determining both the terms and overall mortgage amount. This allows a private lender to lend out mortgage financing based on criteria that go beyond a borrower’s overall credit score.
Essentially Private lenders are basing the mortgage calculations by assessing a homeowner's property which is used to leverage the private mortgage loan. Private lenders will calculate:
- The Loan-to-Value (LTV) by assessing a current appraisal of your property. Generally, as private secondary mortgage finance is considered to be higher-risk, a private lender will not lend beyond a 75% LTV which represents up to 75% of the appraised value of your property.
- The degree of equity that a homeowner has in their home. The overall percentage of equity compared to what is still owing on your first mortgage will largely help to determine the final mortgage loan amount. Private lenders will need a minimum of $70, 000 in equity in order to approve a homeowner’s mortgage request.
- Any additional financial assets (if applicable)
- Take into consideration the location of the property - As in all things pertaining to real estate, location is paramount when negotiating terms on a private mortgage. There is considered less risk for a private lender to lend out mortgage financing for a property in a desirable neighborhood.
- Overall condition of the property - Just as the location is an important variable, so is the current condition of your property. Private lenders will be assessing whether there may be water damage, mold or foundation issues. Conversely, any updates and renovations will increase the desirability of your property and help to secure private mortgage financing.
What Rates and Fees do Newmarket Private Lenders Typically Charge?
Generally, the interest rates associated with most private mortgage loans generally fall between 7% to 12% depending on the financial picture presented by a given homeowner. Most private loans only require the homeowner to pay interest on the mortgage during the course of the mortgage term.
There will also be fees associated with private loans. These fees will cover the lender's costs and associated administrative fees to process a private loan option. In general, the fees charged by most private lenders will be between 3% and 6% of the total cost of the mortgage loan.
When arranging a private mortgage loan, it is important to bring with you all the necessary documentation including a recent home appraisal, proof of all sources of income, a list of any financial assets as well as the last three years NOA’s. It will help to also be clear in terms of which second mortgage loan would best suit your short-term financial goals.
Mortgage Broker Store Will Help Direct You Toward Private Mortgage Options
If you are a Newmarket homeowner or a borrower that would like to obtain mortgage financing, don’t let credit issues stand in your way of purchasing a home or taking out hard-earned equity from your property to pay for needed expenses.
Mortgage Broker Store has access to a broad network of private lenders in the Newmarket area. A private lender will be able to sit down with you and discuss your options directly which will help you achieve your mortgage goals.