Home to one of Canada’s most expensive housing markets, private mortgage lenders in BC can help those with bad credit, high debt, or low income to purchase or refinance a mortgage. Going with a private mortgage lender for bad credit can help bridge the gap while you work to repair your credit score. Even so, private mortgage lenders aren’t just for those with bad credit. Private lenders can even help those with a good level of income and a good credit score but were declined by the banks.
Private mortgages are lent out by private lenders, which can range from individuals to corporations set-up for mortgage financing. Whether you’re borrowing from an individual or you are getting financing from a Mortgage Investment Corporation, private mortgages are a more flexible and accommodating alternative to conventional mortgages.
To make up for the generally riskier profile of those looking to get a private mortgage, private lenders commonly require you to have a low loan-to-value ratio (LTV), which is the total debt (such as an existing mortgage or home equity line of credit) compared to the value of your home. The lower your LTV, the higher the chance the private lender has to recover money should you default on your mortgage. A good LTV ratio to have is below 60% if you are looking to get a private mortgage in BC.
Private mortgages also have higher interest rates than traditional mortgages from banks and other financial institutions, and private lenders may also charge a lending fee.
Some private mortgage lenders in British Columbia include:
|Private Mortgage Lenders in BC|
|Rala Investments||CCW Lending|
|The Mortgage Group||National Equity Lending Corp.|
|GLM Mortgage Group||Prime Mortgage Works|
|VWR Capital||SNEG Mortgage Team|
|Sand Dollar Mortgages||One Stop Mortgage Corp.|
|Silver Hill Mortgage Corp.||Arise Mortgage Corp.|
|Sandhu Capital||Royal Blue Solutions|
|Amansad Financial||Dominion Lending Centres|
|Can Terra Financial||Bancorp Financial|
|Bayfield Mortgage Professionals||Alt Mortgages|
|Capital Direct||Lanyard Group|
|Peoples Trust||Premiere Mortgage|
Private mortgage rates will vary from lender to lender, and they will also depend on your debt levels, home value, credit score, income, and property location. Second and third mortgages will have much higher rates than a first mortgage.
The average price of a home in Vancouver is $1 million as of February 2021. Since private lenders require you to have an adequate level of home equity, let’s say you have an LTV ratio of 60%, which means you own 40% of the home’s value.
Private mortgages can be used for debt consolidation, if you’ve been denied by other lenders, or as short-term financing. Perhaps you have recently lost your job and you cannot afford your mortgage payments to your bank. A private mortgage can be used as emergency financing to help you avoid foreclosure on your home. Most private mortgages have a term of around one year. How much would a private mortgage cost?
Private lenders commonly charge a financing fee of around 2% on the amount that you are borrowing. If you are borrowing $600,000, then you would be charged $12,000 in lending fees.
Private mortgage rates are around 5% to 6%. For a one-year term, this will mean that you will pay from $29,412 to $35,268 in interest over the year.
While upwards of $40,000 in interest and fees for a $600,000 mortgage seems quite costly for one year, it allows you to avoid the worst-case scenario of a foreclosure. Getting your finances back on track, building up your credit score, and paying down existing debt can ensure that you will have a strong exit plan to transfer over to a mortgage with a lower mortgage rate at the end of the one-year term.
The cost of a private mortgage will vary from lender to lender, which can be based on your income, credit score, and home equity. Private lenders usually charge a fee based on the amount being lent. This fee is usually around 2%. While a private mortgage will cost more than a conventional mortgage, they are usually only used as short-term temporary financing.
|Mortgage Rate||Total Interest Cost||Total Cost||Monthly Payment|
|6% + 2% Fees||$35,268||$47,268||$3,839|
Previously known as the Financial Institutions Commission (FICOM), the BC Financial Services Authority (BCFSA) regulates the mortgage industry in BC. Private mortgage lenders do not need to be licensed if they lend out less than ten mortgages per year. Even so, private lenders normally source their mortgages through licensed mortgage brokers.The lack of licensing and regulations allows private lenders to accept homeowners even with low income or poor credit scores.
In 2020, the Government of British Columbia initiated a review of the Mortgage Brokers Act. Among the proposed changes is the elimination of the ten mortgages or less exemption from licensing. Mortgage lenders would also have a duty to borrowers, such as determining if a mortgage is suitable for a borrower.