When it comes to counting the cost to completing a private mortgage loan there is no definitive answer. These loans are less regulated than the rest of the mortgage industry and that leaves room for providers and intermediaries to take advantage where they may.
Ye Old Boy’s Club Private Lender
In finding out how much a private loan will cost you…finding out who the private mortgage lender will be makes all the difference.
There’s a dirty old pirate who has been using his gold as a snare for years. He preys on the weak and the financially vulnerable using his ill gotten treasure to heap up more just for counting later.
Your anxiety is his excitement and if you approach him to be your lender he will use every manipulative tactic in order to get you to borrow his money.
And once you sign he has got you. The contract was signed in blood, sweat, and tears…and they are all yours.
Fact Finding To Lower Your Costs
Here is how to get this pirate to ‘walk the plank’ and keep your private mortgage costs down. We need to expose his snare through finding the facts about how much an Ontario private mortgage should cost.
Best practices for setting the cost of a private mortgage are guided by ethical lending sources who see both sides of the situation. They take into consideration the following areas:
- The Borrower’s Need – how badly you need the money shouldn’t be a reason to take advantage and gouge you. In fact, I have had many instances where an urgent need has caused one of my private lenders to actually lower their cost in order to help get the loan funded.
- The Lender’s Risk – every time a private mortgage lender loans money they take a risk. One of the ways to offset the risk is by charging a cost in order to lower the risk.
- Market Competition – working with many lending sources enables me as an Ontario Mortgage Agent to keep private lenders honest and get you the lowest cost considering your situation. This is accomplished by sending your file out to multiple lenders at the same time to get them to bid on your loan. This also keeps your costs down if there are multiple lenders undercutting each other trying to fund your mortgage.
Find out more about all of things you need to know about your Private Mortgage Made Easy
Counting The Cost Of Your Best Private Mortgage
Getting a great private mortgage loan will come with a cost. There are many specific situations where there are other costs not listed below however here are some of the most common and the numbers.
The potential costs to complete a private mortgage are:
- Property Appraisal – this can be done without cost or a third party service provider with an average of $500 for the report
- Legal fee – as private mortgage lenders register their interest against your property on title there will be a real estate lawyer or closing service involved with an average estimated cost of $1,500
- Lender fee – this is usually charged as a percentage of the amount borrowed and can be between 1 – 3% of the loan amount. Quick example of a 2% lender fee on 50K is $1,000.
- Brokerage fee – the cost of using an intermediary to facilitate the private mortgage is estimated at between 5 – 10% of the loan amount again depending on the risk.
Important note…I understand that often the cost of a private mortgage loan makes it hard to pay these fees. To overcome this I will always try to ensure we get the amount you need plus these costs so that they are not out of pocket.
Getting Your Private Mortgage For Less
Consider the cost of not working with the best lender possible for your situation. Please take this seriously and ask the tough questions!
Paying additional cost for the same amount of money only burdens you and your family without any additional benefit. As your Newmarket Mortgage Agent, I find you the lowest cost lender and make them compete for your business.
Now that our pirate’s snares have been exposed we can watch as this scoundrel retreats to the murk.
The facts presented here are an effective weapon to help you keep the cost of your loan to a minimum. It’s like getting the gold and keeping your dignity intact at the end of the day. I believe your loved ones will thank you for your diligence. Now let’s get started below.