Private Mortgage Lenders And Rates Are Very Regional
In recent years, private mortgage lenders have grown in numbers as baby boomers seek out different, more secure investing opportunities outside of the stock market roller coaster of the last ten years.
Regardless of where you live in Canada, there are likely private mortgage lenders not too far away that could be interested in your property if private funding is required.
However, unlike institutional lenders that tend to be more consistent in terms of interest rates right across the country, private mortgage funding and rates can vary tremendously from region to region. There can even be different regions within a province where rates and available funds can vary considerably.
Like most free markets, private mortgage funding is based on supply and demand where lenders will charge what the market can bear in relation to the competition.
Private mortgage sources are mostly regional lenders because they understand the real estate market in their own back yard and are more comfortable assessing mortgage opportunities in areas they are most familiar with.
So if any particular area has a limited number of private lenders, it stands to reason that the interest rates quoted are likely going to be more on the high side due to a lack of competition.
On the flip side, in areas where the real estate market is strong and there are a larger number of private lenders present in the market, rates on average are going to be on the lower end of the spectrum.
But there are all sorts of variations around these two extremes and somethings what is available can be very different from what you might expect in any given area.
For instance, in the Ontario’s GTA, private mortgage rates can range from 8% to 12% on residential and commercial first mortgages, depending on the level of confidence the private lender has in the local market where the property is located.
Within the stronger real estate markets in Montreal, private mortgages can start as high as 15% regardless of what may be considered a lower risk scenario.
Loan to value ratios will also vary from region to region, again reflecting the strength of the local real estate market as well as level of competition.
If you’re actively seeking private mortgage financing, you’d do well to contact a mortgage broker that works with private lenders in your area so you can not only develop a better understanding of potential leverage and pricing in your market, but also access their sources as private lenders are not always easy to locate without the assistance of a mortgage broker.
About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel