Burlington, Ontario, is family-friendly. It has a scenic waterfront, plus events and cultural festivals. Burlington’s Economic Development board reports a diversified economy and the same in the labour force.
People looking to invest in the town can consider private lending solutions from Mortgage Broker Store. People who already own homes in Burlington but need an alternative to a traditional mortgage or loan can also consider these lenders. Their criteria are based on equity rather than a credit score.
Understanding The Difference Between Banks and Private Lenders
In Ontario, getting a mortgage with a bank has never been more difficult. Their interest rates are at the highest levels in decades, and they are very strict on other criteria. For any new purchase mortgage, banks will demand a high credit score, good employment, good income, and a sizable down payment.
Private lenders have a much simpler set of approval criteria. These alternative lenders do not strongly consider income, credit or employment for mortgage approval. They prefer to look at the property alone, and if they think they would be able to have all their money paid back in the future.
Exploring Customized Private Lending Options Tailored to Burlington's Housing Market
Mortgage Broker Store provides private lending strategies for Burlington residents and others. To offset any decrease in sales, homeowners can finance renovations through a second mortgage to make a home more attractive with a private loan.
There are several options to choose from.
Second Mortgages
According to Area Vibes, the cost of living in Burlington scores only an F rating. That means residents could struggle with their finances and have bad credit scores. A second mortgage is about putting additional financing on a home that already has a first mortgage. Because these are high-risk, private lenders offer them. They focus on what’s called a loan-to-value ratio (LTV).
The LTV is usually calculated by taking the total mortgage amounts requested and dividing them by the appraised value of the property.
Here's an example of how that works. If a property is worth a million dollars and the borrower has a $500,000 first mortgage, the borrower might ask for $250,000 on a second mortgage. That makes the LTV ratio request at 75%. Most private lenders will lend up to 75% LTV in urban areas.
Debt Consolidation Loans
Burlington MLS® stats report that the average sold price was $1.1 million as of July 24, 2024. That represents a 3.7% yearly drop.
Private lenders offer customized products, including debt consolidation loans. These combine several different debts into a single payment. The collateral is usually the house. There is only one monthly payment and a potential for lower interest rates.
Power of Sale/Foreclosure Solutions
Although Area Vibes lists Burlington’s employment opportunities as an A+, homeowners can still struggle when a sudden job loss or medical issue occurs.
Private lenders offer help when the situation has reached the power of sale or foreclosure stage. They can supply the money to stop either process, but private mortgage payments go toward the interest not the principal . It's a short-term solution because they are more expensive than a traditional mortgage. Remember, a homeowner could lose their property and get evicted with either a power of sale or foreclosure with any type of mortgage.
In Ontario, a lender can start the power of sale process after 15 days of a default. Foreclosures take a longer time because there's more court involvement.
Practical Advice for Burlington Residents Navigating Private Lending Decisions
Burlington residents looking to get a private loan should pay special attention to their equity. That’s the part of the home that’s paid off. This equity is an important part of the loan-to-value (LTV) ratio, which is a key factor private lenders use when deciding on an application.
This ratio compares all of the requested and existing mortgages to the home's appraisal value.
A home appraisal is essential to determining the current market value of a home or property. It's a necessary part of the LTV ratio. This is an estimate of the market value of a property. Appraisers look at renovations and compare similar properties that have recently sold.
Regulatory Considerations: Meeting Licensing Requirements for Private Lenders Operating in Burlington
Private lenders are not regulated like banks. However, mortgage brokers who work with private mortgages must follow the Mortgage Brokerages, Lenders, and Administrators Act.
The Financial Services Regulatory Authority of Ontario (FSRA) ensures brokers and their agents follow the Act.
The FSRA has set out a list of conduct and compliance standards that include transparency in transactions and proper disclosure of all terms. This is a regulatory body that conducts regular audits and monitors activities. They also have the ability to enforce actions and impose fines
Interest Rates and Lending Terms: Analyzing Market Dynamics and Affordability Factors in Burlington
Private lenders’ rates are generally higher than those of more traditional institutions like banks. This is because these lenders assume a more significant risk. The loan-to-value ratio of where the property is located comes into play.
On the other hand, private lenders have more flexibility when it comes to repayment terms. The loans are usually for one to three years. Borrowers should have a refinancing or selling strategy with a private loan.
Looking For a Private Mortgage in Burlington?
Mortgage Broker Store can help you with competitive private mortgage rates. One of our priorities is loans that don’t meet traditional lending institution requirements. Unlike many competitors, we are both a direct private mortgage lender and a mortgage brokerage. Our team includes private lenders, brokers, and real estate agents. Let us help you prepare for and get a product that meets your requirements.
Contact MortgageBrokerStore.com for more information.
