What is Private Lending vs Prime Lending?

Private Lending

A combination of Coronavirus, rising interest rates, higher home prices and tougher qualification requirements for a mortgage loan have made purchasing and refinancing homes more difficult in Canada.

If you answer “yes” to any of the questions below, you may be better suited for a Private Lender for your purchasing and refinancing needs:

‍

1. Credit Challenges?

• Do you have limited credit history? (Less than < 1 year)
• Do you have bruised or damaged credit? (Credit Score < 550)
• Have you declared bankruptcy or filed a consumer proposal?

‍

2. Income Challenges?

• Are you self-employed or claim a low income on your annual tax return?
• Is your income solely cash or commission based?
• Are you employed and not able to secure the entire mortgage loan amount from a traditional bank?
• You can refinance and access your current equity to “prepay” one year of mortgage payments and cover for other cost of living expenses.

‍

3. Cash Flow Challenges?

• Do you need a 2nd mortgage?
• Do you require a rush closing? (Less than < 1 week)
• Do you need a quick secured line of credit for renovations, debt consolidation, vacations, education or other financial obligations?
• You can refinance and access your current equity to “prepay” one year of mortgage payments and cover for other cost of living expenses.

‍

4. Properties Challenges?

• Are you an investor looking to finance multiple properties?
• Does your property have a commercial component?
• Does your property need fixing up?
  ‍

‍

Who is a Private Lender?

‍

Quick Facts about Private Lending:

• Higher Approval Rates: Private lenders offer more lenient qualification requirements
• Shorter Loan Terms: Private lending is short-term ranging from 6 months to 1 year
• Quick Turn-around Times: Closing can be as quick as 48 hours
• Rates: Private lending rates typically start at 5.99%, but are lower than other high-interest credit options
• Additional Fees: You may pay a fee of 1.5% to 2%.

‍

Private Lenders are institutions or individuals who offer short-term relief to borrowers who are scrambling to maintain ownership and cannot secure financing from a traditional bank/credit union/monoline or an alternative lender. Private lenders offer financial loans in the form of a registered mortgage secured against real estate. Once the borrower’s circumstances have improved and they are better able to meet tougher qualification requirements (usually within a year) they can secure new financing from more traditional long-term banking sources.

‍

How We Can Help?

We take the saying “Time is Money” to heart! Working at a fast pace, our mortgage experts can match you with a Private Lender in as quick as 48 hours. We have access to seasoned investors who understand the ins and outs of private lending and can therefore offer terms that are customized to your funding requirements.

Beyond securing the funds, we send periodic reminders for the renewal of your private mortgage and actively work to find an alternative solution to lower costs and save you money in the long term.