Situated on the Holland River, within relatively easy commuting access to the GTA, and surrounded by nature, Bradford offers both the amenities of a big city with a country feel for its roughly 24,000 inhabitants. With a wide choice of both elementary and high schools, new housing developments being constructed, and an array of outdoor activities on its doorstep, Ontario homebuyers are looking to the Bradford area to buy real estate.
Bradford has profited from the general appreciation levels seen on houses across the Province during 2020, nothing less than dramatic. Housing sales have also far surpassed even the most optimistic real estate professionals. Numbers routinely in the double digits in terms of year-over-year appreciation coupled with doubling in the numbers of house sales from this time last year in 2020 have left many Ontarian’s wanting to benefit from such a robust market.
Those seeking mortgage approval can also profit from historically low mortgage rates on most fixed and variable mortgage options. Current homeowners may also be keen on profiting from substantial increases in their house equity. Using these impressive equity gains can be an option for Ontario homeowners that plan to hold on to their current properties through this housing frenzy.
Bradford real estate figures reflect the robust numbers seen elsewhere throughout the Province. The Bradford area has seen a year-over-year appreciation increase of 40% from April 2020. With this dramatic appreciation, the average house price has now risen to 1 million dollars. Houses are routinely being snapped up, mirroring other areas throughout the Province including the GTA.
Types of Bradford-based Lending Options
If a Bradford homeowner/borrower is seeking secured mortgage financing, there remain different lending options. In the mortgage industry lending options fall into three broad categories and lenders are available for mortgage financing based primarily on borrowers/homeowners creditworthiness and overall household income.
A Lenders- Banks
Banks demand exemplary borrowing criteria including near-perfect credit as well as easily proven yearly-based full-time income. Borrowers are often put through rigorous mortgage stress tests to be approved for mortgage financing. Lending criteria being as stringent as it allows the banks to offer very low interest rates.
B Lenders- Credit union and trust companies
Although the credit score needed to be approved for mortgage financing is not quite as stringent as their bank counterparts. A borrower/homeowner must be able to demonstrate substantial income and credit scores must still not fall below 550 to be considered for a mortgage loan through these lenders.
Lenders- Private lenders
There are well-established private lenders in the Bradford area on either an individual basis, as part of a group of private lenders or mortgage brokers that specialize in secured private mortgage financing. Private lenders in the Bradford area can lend out different types of second mortgage options as well as renegotiating the terms of your principal mortgage if you are already a homeowner.
What Do Private Lenders require?
A private lender will be assessing the Loan to Value (LTV) on your property which is based on a recent appraisal of your home. Bradford private lenders will lend up to 75% of the current value of your home. Lending beyond 75% of the appraised value of your home is deemed a high-risk loan and a private lender will try to mitigate risk.
The existing equity in your property will also play a significant role in obtaining private mortgage financing. These lenders will prefer to see at least 25% existing equity in your home when determining mortgage amounts and terms.
Mortgage rates on all types of private mortgage loans are generally between 7% to 12% with any associated fees ranging from 3% to 6% of the loan’s total cost. Although these rates may be higher than the banks will charge, they enable a homeowner/borrower more flexibility, are negotiated faster than traditional mortgage financing, and are structured as short-term loans (usually between 1 -3 years).
Private mortgage loans provide the time to restore credit issues if a borrower/homeowner makes mortgage payments in full and on time which will positively affect credit scores. If your home is worth $800,000, then a private lender will not lend more than $600,000 which is 75% of the total value of your home. Both credit and salary will also come into play but will not stand in the way of private mortgage financing, unlike the banks and credit unions who rely heavily on credit scores and creditworthiness.
What Types of Private Loan Options Are Available?
- Private lenders can overlook poor credit. How is this possible? By broadening the mortgage criteria, beyond traditional salary types and credit scores/creditworthiness, private lenders can provide short-term mortgage financing for any number of financial reasons. Loan options can include:
- Home Equity Line of Credit (HELOC)- This is a revolving line of credit leveraged against your home using existing equity. A homeowner can draw on the funds when required and only responsible for making interest payments.
- Home Equity Loan- A home equity loan also taps into a homeowner’s existing equity but in one negotiated lump sum with monthly payments made on the home loan.
- Home renovation loans- By utilizing the equity in a property, a home renovation will provide funds to cover any pressing renovation or fix-ups needed on the property. By investing in equity to take care of renovation, the value of the property will ultimately increase.
- Bridge financing- Home equity can also provide funds to pay for short-term financing goals. Bridge loans tend to be negotiated for between 3- 6 months terms.
- Negotiating new terms on your principal loan- A private mortgage loan can be negotiated with new terms that will enable a Bradford homeowner to make mortgage payments comfortably and/or pay off any mortgage arrears.
- Second Mortgage- Second mortgage loans can help to pay off immediate expenses and help to make the principal mortgage payments on a home.
- Debt consolidation loans- A private debt consolidation loan will enable a Bradford homeowner to merge all debt payments (liabilities) into one manageable monthly debt payment. This will help to restore credit if the payment is reliably made on time every month.
What Steps Can You Take to Prepare For a Private Mortgage Loan?
- Consider a pre-approval if you are applying for a principal mortgage
- Be very familiar with your credit score and credit report
- Research private lending options in your area
- Arrange to sit down with a private lender
- Know what type of loan you feel would address your short term financial needs
- Gather all relevant paperwork
- Bring a recent appraisal and proof of the degree of equity in your home
It is advisable to do whatever you can to improve your credit score. Try to pay down high-interest debt if you can. Make an effort to always pay any liability payment on time and in full if possible. The better your credit ultimately will give you the most favourable terms on your final secured mortgage agreement.
Mortgage Broker Store Can Point You in the Direction of Private Mortgage Financing
With specialized knowledge in the realm of private lending as well as the complexities of default processes including the power of sale and foreclosure, Mortgage Broker Store will be able to advise a Bradford homeowner/borrower on suitable mortgage options. With access to a broad network of private lenders based in the Bradford area, we will be able to connect you with a private lender who can negotiate a variety of loan options based on a borrower/homeowner’s particular financial criteria.