Private Mortgages in Leeds & Thousand Islands Township are an alternative solution to several unique situations homeowners face. The Township is located along the St. Lawrence Seaway with access to all important Canadian-American markets. The population as of 2016 was 9,465 residents. The average income was $67,366 dollars.
Leeds & Thousand Islands Township is conveniently located on Highway 401, approximately halfway between Toronto and Montréal. Almost all (89.77%) of the people who live in this area are homeowners while the rest rent.
Homeowners in the area can find themselves in a situation where they need fast financing. Private mortgages in Leeds & Thousand Islands Township provide the answer. Everything you need to know is included here starting with an overview of the current real estate market.
The Real Estate Market in Leeds & Thousand Islands Township
Understanding your buying and selling options in the area means having a quick overview of the trends and numbers. Among the concerns expressed in a recent PWC report for 2023 are availability and housing costs. The report says that higher interest rates may counterbalance any easing of property prices.
If you’re considering buying in Leeds & Thousand Islands Township, it’s important to see how private mortgages can benefit the process. Please read on to find out who these alternative lenders are, how they operate, and what group of specific mortgage applicants they cater to.
Who Are Private Mortgage Lenders
A private lending brokerage fills in a specific market need. These companies are able to negotiate mortgage terms for borrowers who have poor credit or may be facing financial issues that make working with the traditional lender impossible. This is also a good alternative for people who cannot go through a traditional bank’s longer underwriting process.
Traditional banks and those lending institutions like them finance based on credit scores and income levels. The process with private mortgage lenders is usually more direct and simple than with bank mortgages. Calculations involve the loan-to-value ratio and interest payments.
The Interest Payment Calculation
In Ontario, most private mortgages will follow similar conditions and terms. If you’re thinking about applying, here’s a checklist:
- The mortgage term is shorter than a conventional one — usually one year.
- The interest rate is fixed on these products.
- Only the monthly interest gets paid down on the payments.
- It’s at the lender’s discretion to renew the product at the end of the term.
These private mortgages differ from those from more traditional lending institutions. For example, private lenders only require interest-only payments instead of amortized ones. A typical bank mortgage payment consists of the interest and additional amounts paid toward the mortgage balance.
On the other hand, these private products cannot be paid off with monthly installments. The payments are interest-only, so owners must sell the property or get bank financing to pay the mortgage down.
Here’s an example. On a mortgage of $100,000 at a 12% interest rate, the total interest payments yearly would be $12,000. Therefore, the monthly interest payments on a private mortgage would be $1000 dollars.
Another calculation needs to be taken into account too.
The Loan to Value Ratio.
Generally, private mortgages rely on the property’s value instead of borrowers’ credit scores. The ability to gauge an applicant's equity is standardized with the loan-to-value ratio (LTV) metric.
Quite a few private lenders use this as their sole benchmark for approving an application. Here’s another example of how this metric works and how an LTV ratio gets calculated.
A property could be valued at $1 million and have a first mortgage of $500,000. The homeowner might be looking for a second mortgage of $200,000. The formula works this way.
(500,000 + 200,000)/1,000,000 = 0.70 or 70%
With this set of numbers, the loan-to-value ratio is 70%
The loan-to-value ratio reflects the existing equity that anyone has in their home. Most private lenders in places like Ontario will not exceed an LTV of 75%. Accurately calculating the number means getting a new appraisal and up-to-date mortgage balance statement.
Location Matters To LTV
Location is another factor that matters. Major cities are more desirable places to resell. In fact, the lender’s maximum LTV value can drop to 65% in less populated areas. The home’s condition is another factor in getting a private mortgage. Structural issues like a cracked foundation and the need for extensive renovations can make a difference.
Private mortgage lenders usually prefer traditional housing because these properties appeal to a wider range of buyers. A mortgage request is more likely to be denied if the property is farmland or has mixed commercial space. Even places like converted churches are frequently denied.
Private mortgage lenders can help property owners facing financial difficulties and need money quickly. For example, a private mortgage can stop a power of sale or foreclosure. These alternative finance companies are also used by people looking to consolidate debt.
The last step in accessing your equity this way is finding private mortgage lenders.
Where to Go for Private Mortgages in Leeds & Thousand Islands Township
Private mortgage lenders are more difficult to find than typical bank lenders. Most private lenders are located in Major cities and deal with mortgage brokers instead of directly with consumers.
Looking online is a good starting point for finding private financing. Begin with a Google search. Question the credibility of any website that has grammar and spelling mistakes. Make sure the URL starts with HTTPs and has a padlock.
Mortgage Broker Store is both a mortgage brokerage and a direct private lender. Their team can approve mortgage requests and advise on your best private loan options. We supply free quotes and expert advice. Email ron@mortgagebrokerstore.com or call 416-499-2122.
