When you apply for a private mortgage, the interest rate you get isn’t just picked at random. Private lenders look at several things before they offer you a rate. If you understand what they’re looking at, you can better prepare — and maybe even get a better deal!Here are 5 key factors that affect private mortgage lenders rates in Canada:
Even though private lenders are more flexible than banks, your credit score still matters. A higher credit score shows you’re good at paying back loans, which usually means lower interest rates.
Lenders want to know about the property you’re using for the mortgage. Is it in a good location? Is it easy to sell if needed? A strong property can help lower your rate.
Lenders check how much money you earn and how much debt you already have. If you have steady income and fewer debts, you’re seen as less risky — which could mean better private mortgage lenders rates.
This is how much money you want to borrow compared to your home’s value. A lower LTV (meaning you’re borrowing less of your home’s value) usually means lower rates.
Shorter-term loans often come with lower rates than long-term ones. But shorter terms mean bigger monthly payments, so weigh your options carefully.
Private lenders focus on risk. The lower the risk, the better the rate. Talk to a trusted Mortgage Broker to help you compare offers and understand your options better.