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Private Mortgages


Private Mortgage Lenders in Cambridge, Ontario

The city of Cambridge, Ontario, is located just southeast of the Greater Toronto Area. Combined with the nearby cities of Kitchener and Waterloo, Cambridge is part of the Tri-Cities area, a densely populated and economically prosperous region of Ontario.

 

With a sizeable population and plenty of draw for homebuyers and investors alike, Cambridge is home to private and alternative mortgage lenders who can help you find a mortgage that suits your needs and your property.

What are Private Mortgage Lenders?

A private mortgage lender is, basically, any lender that is not a bank, a credit union, or a trust. Private mortgage lenders are not federally regulated, which means they’re not subject to the same restrictions that banks are when it comes to approving mortgage loans. If you’ve been turned away by a bank due to bad credit or unprovable income, a private lender in Cambridge might be a viable option for securing the mortgage you need.

The Different kinds of Private Lenders

There are many private and alternative mortgage lenders in Cambridge and throughout Ontario. These private lenders may operate as one of the following:

 

  • Individuals
  • Syndicates
  • Mortgage Investment Corporations (MICs)

 

An individual private mortgage lender is self-explanatory — this is a single person with independent investment capital who helps property owners by investing in mortgages.

 

A lender syndicate is a small group of private investors who invest in multiple mortgages at the same time. If you get a syndicated mortgage loan, your mortgage will likely be funded by a few different investors who have chosen to invest in your mortgage. By spreading mortgage investment capital between a few different investors, a mortgage syndicate mitigates the risk to investors, and in turns keeps interest rates relatively affordable.

 

MICs are a little more complex. An MIC is essentially an incorporated body that pools investment capital from many different sources. Individual investors can choose how much they want to contribute to an MIC, and the pooled capital is then distributed over all of the mortgage loans that the MIC funds. An MIC allows individual investors to invest in real estate for a relatively low risk. Investors can’t pick and choose which mortgages to invest in, so your mortgage may be approved by the MIC as a whole.

Getting Approval from a Private Lender

 

While banks and other lenders look at your income, credit rating, and other metrics in addition to property equity, private and alternative lenders tend to focus mostly on the equity.

 

This is good news if you have bad credit, if you’re self-employed, or if your income is otherwise uncertain or difficult to prove. As long as the property contains at least 25 percent available equity (the home’s value minus all outstanding loan debts), you can be approved by a private mortgage lender in Cambridge, Ontario – or most other cities in Ontario.

Rates and Fees Associated with Private Lender Mortgages

Private lenders charge higher fees than banks or credit unions, but this extra cost translates into better flexibility. In general, a mortgage from a private lender carries a higher interest rate, because collecting interest helps the lender mitigate some of the risk inherent in lending to someone with bad credit or unprovable income.

 

If your mortgage is approved by a private or alternative mortgage broker in Cambridge, you can expect to pay fees for the lender, broker, legal process, appraisal and administration.

 

As with traditional mortgages, mortgages from private lenders are subject to power of sale in the event that you default on payments. Before applying for a mortgage through a private lender, make sure you have a clear plan for how to pay back your mortgage, including added fees and interest, in a timely manner.

Mortgages on Properties in Cambridge

On average, the population of a city or town correlates to its popularity among investors. This is because it can take a long time to sell a property in a small town, while in a larger city property sales tend to be faster and easier.

 

Cambridge’s population as of 2019 is around 130,000, meaning lenders can safely offer loans up to 75 percent of total property value. Cambridge’s close proximity to Toronto and its Tri-Cities status means that the population of the whole region is quite dense, allowing for more flexibility and loan potential. 

 

Cambridge’s economy is strong and growing, while its housing prices remain relatively low in comparison to the rest of Ontario and the Greater Toronto Area. Green space and community amenities make Cambridge popular with new home buyers, which in turn will draw more investors to the area.

 

 


Second Mortgages


Second Mortgages in Cambridge

The city of Cambridge, Ontario is located southwest of Toronto, at the meeting point of the Grand and Speed rivers. Cambridge and the nearby cities of Waterloo and Kitchener together form what is known as the Tri-Cities area. With a population of around 130,000 as of 2019, Cambridge’s location and landscape make it an ideal spot for homebuyers and investors.

What is a Second Mortgage?

A second mortgage is a loan taken out on a property that has already been mortgaged. Second mortgages tend to carry higher interest rates than first mortgages.

 

People take out second mortgages for a variety of reasons, including consolidating debt, paying off student loans, financing renovations, and covering unexpected or emergency expenses. Second mortgages are a better source of fast financing than credit cards or personal loans. Like any mortgage, a second mortgage is subject to power of sale if you default on multiple payments.

 

A second mortgage is similar to a Home Equity Line of Credit (HELOC) -- a HELOC is a revolving line of credit for an amount determined by the percentage of equity in a mortgaged property. Banks can usually offer HELOCs, but they rarely offer second mortgages.

 

The main difference between a HELOC and a second mortgage is that the latter is generally a one-time lump sum, while a HELOC can be replenished by paying back outstanding debt, similar to a credit card. Both require approval from a lender, and both are subject to power of sale in the event that the borrower fails to keep up with payments.

Qualifying for a Second Mortgage

Though they may offer HELOCs, banks don’t typically offer second mortgages. For this reason, property owners seeking a second mortgage will usually have to approach a private or alternative mortgage lender.

 

In determining whether or not you qualify for a loan, alternative mortgage lenders focus mostly on the amount of equity in the property. As long as the property’s equity is at or above 25 percent of the total value, you should be able to find a private lender in Cambridge, or elsewhere in Ontario, who can approve you for a second mortgage.

Rates and Fees for Second Mortgages

Second mortgages tend to carry higher interest rates than first mortgages because they are riskier. If power of sale or foreclosure is exercised, the profit from the property sale goes to the initial mortgage lender first. The second mortgage lender gets whatever is left over after the outstanding amount on the first mortgage has been recouped, which often means that the second mortgage lender ends up losing a portion of their investment in the event of a default.

 

Most lenders will charge between 7 and 12 percent interest depending on the type of property and its Loan to Value ratio. Most mortgage brokers also charge setup and legal fees, usually amounting to around 4 to 6 percent of the total mortgage amount. On top of this, you’ll be liable for appraisals and any other legal work.

What are the Risks Associated with Second Mortgages?

As stated above, second mortgages are riskier, which makes them more expensive and thus more difficult to afford. As with any mortgage loan, your property is used as collateral -- if you default on your mortgage or are unable to meet payments over a period of time, the lender has the right to repossess and sell your home through power of sale.

 

Second mortgages are a good source of quick financing, but don’t mistake them for free money. Make sure that you have a clear plan for how you’re going to pay back the second and first mortgages. While alternative mortgage lenders focus more on equity than personal finances in determining whether you qualify for a loan, it’s a good idea to look at your own finances and income situation to ensure that you’re capable of paying back your loan. 

Mortgages on Properties in Cambridge

A larger population tends to mean quicker property sales, so cities with larger populations are usually more attractive to investors. Though Cambridge itself is not especially large, its population is over 100,000, meaning lenders will generally be able to lend up to 75 percent of property values. This is in addition to the fact that Cambridge’s position within the Tri-Cities area means the overall regional population is actually much greater.

 

Cambridge’s proximity to Toronto and its location in an economically prosperous area makes it attractive for homebuyers and investors. Housing is still relatively affordable in the city, while the many local amenities, parks, and entertainment options are major draws for prospective home buyers and property investors.

 

 


How to Stop Power Of Sale


How to Stop Power of Sale in Cambridge, Ontario

An easy drive from Kitchener, Waterloo, and the Greater Toronto Area, Cambridge, Ontario, is a busy economic centre with a growing population. With relatively affordable housing prices and plenty of amenities, the area is attractive for homebuyers. If you’re considering a mortgage in the Cambridge area, make sure you first understand the power of sale process, and how you can stop it if you hit a financial hurdle. 

What is Power of Sale?

Power of sale gives a lender the “power” to repossess and sell a mortgaged property in the event that the property owners are unable to keep up with mortgage payments.

 

Having power of sale helps to mitigate some of the risk inherent with investing in mortgages. It provides lenders with a tool they can use to recoup their costs if the property owners are unable to pay back the investment amount.

The Power of Sale Process

Power of sale tends to be a last resort -- a lender is unlikely to initiate power of sale unless you’ve missed several payments in a row. If you default on your mortgage, your lender may invoke power of sale by serving you a notice of sale 15 days after the initial default.

 

A notice of sale means that the lender is going ahead with the legal process of power of sale. After you’ve received a notice of sale, you have a redemption period of 35 days in which you can repay the money you owe. If you’re still unable to pay, the lender may proceed by filing for a writ of possession, which will give them the ability to evict occupants and sell the property.

What’s the Difference Between Power of Sale and Foreclosure?

Power of sale is similar to foreclosure -- both are methods through which the lender can take control of the property and sell it to recoup investment costs.

 

One difference between power of sale and foreclosure is that power of sale is generally a cheaper and faster process than foreclosure. Both have to go through the legal system, but in a foreclosure, the matter must be resolved via a formal court proceeding. This is not required for power of sale. For this reason, a power of sale can be completed in a matter of weeks, while a foreclosure may take several months.

 

Another difference is in what happens to the profits after the property is sold -- in foreclosure, the lender retains all the proceeds from the sale of the home, even if the home sells for more than the outstanding amount on the mortgage. In power of sale, the lender gets to keep a portion of the profit equal to the amount owed. Any remaining profit from the sale goes back to the homeowner.

How Can a Homeowner Stop Power of Sale?

The only way to prevent or stop power of sale from happening is to pay your lender. Depending on how far the power of sale process has progressed, a lender may require you to pay just the late amount plus fees and interest, to resume the mortgage. If the power of sale has progressed past the redemption period, however, you’ll likely be liable for the full outstanding amount of the mortgage.

 

It’s up to you to raise these funds if you want to stop the power of sale. In order to do so, you may need to take out a second mortgage or home equity loan, for which you’ll likely want to approach an alternative lender. Another option is to sell the property yourself.

 

In general, home sales are quicker and easier in cities with larger populations. Cambridge’s population is just over 130,000, and the surrounding region is densely populated, so homes should sell relatively fast. Because of this, mortgage lenders also have more flexibility in more populous areas, and you may be able to get approval for a second mortgage provided you have some home equity. 

How Can a Mortgage Broker Help?

As mentioned above, a private mortgage broker in Ontario may be able to provide you with a second mortgage or home equity loan. However, this isn’t the only reason to go to a mortgage broker to stop power of sale.

 

Mortgage brokers have an in-depth understanding of the power of sale process, and they can help you discover your options and quickly outline a plan that suits your needs. Mortgage brokers also have connections with lenders, and can get you a variety of quotes for loans.

 

With over a decade of experience, the team at Mortgage Broker Store can help you go through power of sale and mortgage documents, recommend a course of action, and help you stop power of sale and manage your debt.