Frequently Asked Questions About Private Mortgages
How can I find a private mortgage?
Most people find a private mortgage by working with a mortgage broker or online company that helps borrowers sift through their options and find the right mortgage lender and product for them. It’s also possible to apply for a private mortgage directly with some mortgage companies.
What’s the average interest rate on a private mortgage?
Interest rates in private mortgages are quite variable, as the range in borrowers is much greater than with bank mortgages, where everyone has to meet the same eligibility requirements. At the moment private mortgage rates start at about 5%, but can increase to much more for higher risk mortgages.
Who oversees private mortgage companies in Canada?
Private mortgage providers in Canada are not federally regulated in the same way as banks, but they still have to adhere to federal guidelines for financial institutions. They also have to follow relevant local provincial laws for financial entities.
How quickly can I get a private mortgage?
It’s usually much quicker to get approval from a private mortgage lender than a bank; processing times are on the order of a week, and funding can be released as quickly as 2-3 weeks after application.
What happens to my mortgage if my private lender goes out of business?
If your private lender ceases operation for any reason, your loan does not disappear; instead the debt will be bought by someone else, so you’ll still have to make your mortgage payments as usual.
I can get a competitive rate from my bank; why would I use a private mortgage company?
Some people choose to use private lenders even if they can get a good rate from their bank, because they do not wish to contribute more profit towards large conglomerates, or because they simply find the terms and products available from private lenders more attractive. For example, some private lenders have much more flexible repayment options than banks.