Brampton is a great place to live and own a home, but getting a mortgage to buy a home in the city can be difficult. Many borrowers who apply for a mortgage from a bank will not be successful, as these lenders have very strict rules and regulations that disqualify most applicants. Homebuyers who have been turned away from banks, credit unions and other financial institutions can work with private lenders in Brampton to get loans and even own the home of their dreams.
Why Brampton is a Great Place to Live
With neighbouring Mississauga to the West and within a short drive to Pearson International Airport, the Municipality of Brampton is ideally located for homeowners who want a neighbourhood with a more suburban feel along with convenient transportation and access to communities throughout the Greater Toronto Area (GTA), including the heart of Toronto.
With a strong industrial hub providing a stable backbone for the local economy and an abundance of local amenities, Brampton continues to be an appealing spot for potential homeowners. This is one of the reasons why Brampton has been growing at a rapid pace, with its population reaching 646,480 as of the most recent Canadian population census recorded in 2021.
Retaining an urban presence with all the comforts of suburban living, current residents and potential homebuyers can see the attractiveness of living in Brampton.
Housing numbers across Ontario continue to impress and Brampton is no exception. The GTA in particular has seen decade-high home prices, coupled with a sharp increase in the number of housing sales throughout the region.
According to the July 2022 Brampton Housing Report, the city’s real estate market was the 3rd fastest-selling housing market in the GTA. With a frenzy of buyers wanting to tap into the robust real estate market, the average price of a Brampton home in July 2022 has grown to $1 Million, putting it on par with real estate markets in cities like Markham and Hamilton. This increase represents a roughly 3% increase in home prices from July 2021 to July 2022.
While current Brampton homeowners may be eager to benefit from newfound property appreciation by making use of their home equity. Homeowners can tap into their acquired home equity to take out a second mortgage, a home equity loan, a home equity line of credit (HELOC) and other types of loans to get the funding they need.
This is an effective way to access large sums of money in a short period of time. Homeowners can use this money for anything they want. Many will access their home equity for pressing short-term priorities like paying medical bills or any outstanding debts. Home equity can also be used to fund renovations, make investments or fund vacations.
What about those homeowners that may have poor credit? Although turning to a bank may not be an option if the borrower has a low credit score, in Ontario there are well-established and experienced private lenders (referred to as C Lenders in the mortgage sector) who can provide loans regardless of an individual’s reported creditworthiness.
Mortgage Broker Store can find suitable mortgage lenders based on the unique financial objectives of each borrower they work with and help negotiate favourable mortgage financing terms with those lenders. This saves borrowers money and time, two factors that are vital for paying off debts or placing bids on homes for sale in Brampton. Mortgage Broker Store is also an experienced private lender in Brampton, so if they can’t find lenders to work with a given borrower, they can provide the financing themselves.
Different types of Mortgage Lenders in Brampton
A mortgage lender is an individual, business or institution that offers loans to borrowers for the purpose of purchasing property. If someone wants to get a mortgage in Brampton, they will need to work with a mortgage lender. Not all mortgage lenders are the same, there are different types of mortgage lenders, each with its own requirements and criteria that must be met before they approve mortgage financing.
Credit scores and household income are defining criteria for most mortgage lenders. They will base an applicant’s suitability largely on overall income sources and credit worthiness.
Ontario-based mortgage lenders can be classified under three broad categories:
A Lenders- Banks represent this category of lenders. Mortgage approval can be quite rigorous. Applicants are routinely put through tough mortgage stress tests to determine mortgage eligibility. These mortgage stress rules were tightened on June 01, 2021, further increasing the difficulty of obtaining mortgage financing. Banks also prefer to use easy-to-calculate, substantial household income when approving mortgage loan parameters.
B lenders- Credit unions and trust companies make up this category of lenders. While not quite as stringent as the banks when determining mortgage loan approval, these lenders still expect to see a credit score of at least 550 and above and prefer traditional, substantial yearly household income.
C Lenders- Private lenders make up the final category of lenders. Private lenders are most often sought after by borrowers with poor credit, as they can look beyond credit scores by assessing other criteria. This criterion is largely determined by the appraised value of your home, the calculated Loan-to-Value (LTV) Ratio of your loan application, and, for homeowners, how much home equity they have.
Different Types of Private Loans in Brampton
Private lenders are able to offer a wide range of different loans to borrowers in Brampton including:
- Bad Credit Mortgages
- Home Renovation Loans
- Bridge Financing
- Negotiating new terms on your mortgage
- Home Equity Line of Credit (HELOC)
- Home Equity Loan
- Debt Consolidation Loans
- Reverse Mortgages (open to those 55 years of age and over)
Private Lending Requirements in Brampton
Generally, a private lender will not lend beyond 75% LTV meaning that the total value of all loans cannot exceed 75% of the current appraised value of your home. It is also expected that the borrower will have more than 25% equity built in their home to be considered acceptable for private mortgage financing. The more financial assets you can use to help leverage financing will increase your chances of getting approved.
A private lender will also be taking into consideration the location of your property when calculating the terms of a private mortgage. Generally, homes in larger urban locations will have a higher maximum LTV as those mortgages are deemed to have a lower risk of default in the eyes of private lenders.
How Do Private Loans Differ from Mortgage Loans from Other Lenders?
Just as the degree of lending opportunities in Ontario is varied, so too are the types of mortgages borrowers can get.
Regardless of the type of loan a Brampton homeowner chooses, private loans tend to be different from loans from banks and other traditional lenders in several key respects:
Private mortgage loans are usually structured as short-term loans. Private mortgage financing is designed to provide for immediate financial goals. Most private mortgage loan terms range from 6 months to 3 years compared to 5 to 25 years for mortgages with banks.
Private Mortgage Lenders often overlook poor credit by assessing other loan variables, whereas credit is a big part of the approval process for traditional lenders. In fact, many people who use private lenders do so because they have been rejected by traditional lenders, often because of a low credit score, being self-employed, or trying to buy a type of property that is not a residential home, like an undeveloped plot of land.
How long does it take to get approved for a private loan?
Due to their limited restrictions, private mortgage loans are negotiated quite quickly and the loan application process is relatively straightforward. Private lenders are able to process loan applications within one week on average compared to around several weeks with traditional lenders.
What Rates and Fees Do Private Lenders Charge?
When lenders mitigate risk while structuring mortgage financing, creditworthiness is assessed heavily. Private mortgage loans are negotiated for those with poor credit and are considered inherently a higher-risk loan, therefore rates may be slightly higher than the banks are able to charge.
Generally, private lenders will be charging interest rates between 7% and 12% and any associated fees will typically range from 3% to 6% of the total cost of the private mortgage loan negotiated. Even though they do not use credit scores to approve or reject loan applications, they will use them to help determine the interest rate they charge.
Mortgage Broker Store Can Direct You in Your Search for Private Mortgage Financing
As an active real estate team in Ontario, Mortgage Broker Store has helped hundreds of Ontarians get the loans they need to buy homes, pay off debts and make critical investments. With their diverse network of private lenders across Ontario and in Brampton, they can help borrowers find the right private lender for their mortgage needs, regardless of whether it is a bad credit mortgage or a debt consolidation loan.
After speaking with you over the phone or via email, they can survey hundreds of private lenders and negotiate with them to find the best option. This way borrowers can ensure they are getting the best loan they can qualify for, saving them hundreds over the course of their mortgage or home equity loan.
If there are no suitable options for your needs, Mortgage Broker Store can provide private mortgage financing based on the borrower’s overall finances and goals. To find out what your financing options are, call Mortgage Broker Store at (416) 499-2122 for a free real estate financing consultation. They can help you understand how the financing process works, and what kind of loans you can expect so you are prepared when you start applying for mortgages and other kinds of loans in Brampton.