Searching for reputable private mortgage lenders can be a challenge. Unlike banks and other institutional mortgage lenders who have customer facing operations, branding and marketing, private home equity mortgage lenders rely on mortgage brokers to recommend their service.
It can be difficult to determine if the recommended lender is the right match for you. With this post I hope to provide some insight and experience regarding the various private mortgage lenders in the market.
Over the years I’ve had the opportunity to work with a number of private mortgage lenders. Each lender has their unique niche and specialties. Not all private mortgage lenders are the same and they vary widely in terms of:
- Lending area or geography
- Lending niches (eg construction, commercial, residential, condo…)
- Maximum and minimum mortgage amount
- Maximum loan-to-value
- Ranking of their mortgage (1st, 2nd, 3rd etc…)
- Fee structure
- Borrower qualification requirements
Since private home equity mortgage financing is so specialized it’s impossible to quantify “THE BEST” based on price alone. However some of the important factors to consider when selecting a private home equity mortgage lender for your private first and/or second mortgage are the following:
- Communication: how the lender will approach your private mortgage loan application and whether they are available to service your mortgage should you have any questions or concerns.
- Expectation: Once your private loan is approved what the expectations for performance and exit strategy are.
- Efficiency: how quickly and effectively the lender turns around their decision.
- Pricing: interest rate & lender fee are how the lender is compensated for making a private home equity loan to you. It’s very difficult to set a general rule for pricing however there is a market place based on supply and demand which sets price. Since private lenders service very narrow niches they can overcharge but you want a lender that is fairly priced in the market.
- Renewal: often private home equity lenders will charge a renewal fee at the time of renewal. You want to be aware of those costs and fees should you be in a situation where you need to renew.
MY TOP PRIVATE HOME EQUITY MORTGAGE LENDERS
Magenta Capital Corporation
Magenta is one of Canada’s longest running (1994) and largest mortgage investment corporations. They offer the flexibility of pure private or equity lending with institutional-style operations and post-closing administration which is really important when working with a private mortgage lender.
Magenta offers first and second open and closed mortgages on residential, construction, investment, land and seasonal properties. And their pricing is set and predictable, based on an industry-leading rate and fee matrix.
Magenta has a unique lending area with a strong focus on Eastern Ontario specifically the Ottawa area. Of note they do not currently lend in the GTA or up the Hwy 400 corridor at the time of writing.
Hansa Mortgage Investment Corporation
Hansa Mortgage Investment Corporation is a boutique lender based out of Toronto. Founded in 1992 they have more than a quarter century of experience lending in private home equity mortgages. They are not as large as many other MICs or private home equity mortgage funds but there-in lies the value. The small size of the portfolio means that there is more hands on management which allows Hansa MIC to finance more complex financing requests.
Hansa’s niche is 2nd mortgages secured by residential real estate in the GTA & Golden Horseshoe area.
Some of the highlights include:
- Short-term (12 months) open mortgages for easy exit
- Smaller minimum loan amounts between $10,000 – $300,000
- Ability to deal direct which lowers fees
- 1st, 2nd & 3rd mortgages considered
DISCLOSURE: Author of this post Christopher Molder is director of Hansa MIC
Vault Mortgage Corporation
Vault Mortgage Corporation was founded to fill a noticeable void in the marketplace of a professional, reliable and service orientated alternative lender.
Vault takes a multi-dimensional approach to lending. As private home equity lenders they specialize in working with new-immigrants, individuals who do not declare income, and people with bruised credit. In my experience they take a flexible approach to lending and have reasonable fee structures.
Some of the highlights of Vault Mortgage Corporation include:
- Construction mortgages
- Commercial mortgages
- Terms 12-24 months
- Focus on larger loan amounts up to $2,000,000
Brookstreet Mortgage Investment Corporation
Brookstreet MIC is a well known quantity for brokers in the non-conforming lending space. They have a breadth of products and solutions for alternative home equity lending. As a MIC operating since 2010 they have a lot of latitude to make underwriting decisions. I’ve recommended Brookstreet MIC to many of my clients. One of their most unique products is their second mortgage with price match where they offer a 1 yr fixed term and match the rate of the existing first mortgage.
Geographically they are focused on the GTA and immediate surrounding areas including Halton, Peel, York & Durham.