Who do you go to when you approach a bank for a loan, but the institution turns you down? In this case, private lending might be your ticket to some quick cash. This can be a safe and reliable way to secure funds specifically in Cambridge, Ontario. Unlike traditional banks, private lending offers more flexible lending terms. You don’t have to jump many hoops or wait long to get funding.
That means fast loan approval and funding. So, if you’re looking to get into large competitive markets such as real estate, you can get funding very quickly through private mortgage lenders, even within days. In contrast, it can take up to 90 days for banks to process your application.
In this article (written by the experts at MortgageBrokerStore.com), we share proven strategies you can explore to connect with Cambridge private mortgage lenders.
How can I verify the trustworthiness of a private lender?
Verifying a private lender's trustworthiness is crucial to safeguard your interests and money. You can thoroughly evaluate a private lender's reliability in a few ways:
1. Conduct research: Do online research about the lender on review sites, forums, social media, and their website. Make sure they have an online presence. Look for red flags in reviews like hidden fees or bad communication. Check if they are properly registered and licensed in Ontario. Sites like Better Business Bureau can provide some direction, offering your lender’s rating, accreditation, and even complaints.
2. Ask for references: Always check if a private lender has solid references, as they will give you a better idea of the lender's reputation. You'll know what other clients are saying about their lending program process. You'll want to look at their track record and their transparency with previous clients.
3. Consult professionals: Seek advice from experienced, impartial finance advisors and professionals in Cambridge, Ontario. Their specialized expertise can guide you toward lenders that suit your unique needs, goals, and risk tolerance. Be aware of any referral incentives or commissions that could sway recommendations.
4. Read the loan agreement in detail: The lender should stipulate clear and transparent borrowing terms and conditions. But as a rule of thumb: always take the time to read the loan agreement in detail. Get to understand the lender’s approach to certain loan specifics. That includes fees, interest rates, repayment terms, penalties, and any hidden charges. That’s how you can make an informed decision.
What advantages come with partnering with reliable private mortgage lenders?
Partnering with reliable private mortgage lenders versus large banks has several advantages, the first of which would be their flexible lending criteria. Private mortgage lenders often have more flexible lending criteria compared to traditional banks and credit unions, looking beyond just credit scores and income ratios. They take a holistic approach by considering other aspects such as the property itself, its location, the LTV ratio, etc.
Private mortgage lenders are also quicker, with their streamlined process they can provide funding in days or weeks versus months at banks. This accelerated timeline benefits those needing urgent access to financing.
In addition to this, private mortgage lenders are willing to personalize their approach to funding. They’ll take the time to consider your distinct situation, goals, and property. You can access loan programs tailored to your specific needs and situation, resulting in customized loan terms versus one-size-fits-all.
Are there any fees associated with connecting to trustworthy private mortgage lenders?
In case you’re wondering, partnering with a private lender has several fees. Typically the lender and the mortgage brokerage will charge fees that are relative to the mortgage amount. The lender will usually set a fee of 2% to 4% of the loan amount, and the brokerage will set a fee that matches the lender fee. These fees can vary depending on the risk profile of the mortgage request. Higher risk mortgage requests will have higher lender and broker fees.
Borrowers are typically responsible for appraisal and inspection fees to thoroughly evaluate the property's market value and condition. Appraisals are usually conducted by licensed third-party appraisers and involve comparing similar property sales and valuations in the area.
As for legal and documentation fees, finalizing the loan agreement may require these services, for which you may be responsible to pay for. Be sure to ask the lender to clearly explain all the fees they charge. These can include charges for attorneys, title searches, document preparation, and more. These can range from $1,500 to $3,000.
And lastly, make sure you know about the prepayment penalty. If you repay substantially ahead of schedule, the lender will expect you to offset their lost interest over time. A standard prepayment penalty with many private mortgage lenders is the equivalent of 3 months of interest payments. Regardless, before you sign the loan agreement, review and understand all your lender’s fees in detail.
Can I secure a loan from a reputable private lender without providing collateral?
You can, but not every private lender operates this way. Lenders that offer loans without collateral are sometimes called personal loan lenders, payday lenders, or unsecured lenders. The majority of private mortgage lenders cannot offer unsecured loans. For those who offer unsecured loans, the loans can come with stringent credit requirements, lower loan amounts, and high interest rates.
You can start by applying for unsecured personal loans, where you don’t need collateral to get approved. Make sure to get a loan co-signer, sharing the loan responsibility with a guarantor increases the chances of getting approval on the loan. Their credit reputation and income history will help strengthen your loan application.
Lenders that don’t rely on collateral will look at how credit worthy the borrower is. They will scruitinize the applicant’s income, credit history, and employment. Private mortgage lenders, on the other hand, will focus on the value of the property that is offered as collateral.
Conclusion
Getting a loan from a trusted private lender in your area can provide the flexibility you need. But do your homework first. Make sure the lender has a solid reputation by looking online and checking their reviews.
Understand any fees they charge, like application fees, origination fees, or prepayment penalties. Ask the lender to explain all fees upfront so you know the true cost of borrowing. And carefully review the loan terms before signing anything - look at the interest rate, repayment schedule, loan length, and consequences of late/missed payments.
This may seem like a lot, but as mentioned earlier, speaking to a professional will help. Feel free to contact the experts at MortgageBrokerStore.com if you need assistance.