Canadian Mortgage Lenders

Mortgage lenders are private and institutional financiers that finance the purchase of residential and commercial properties. The rates offered by Canadian mortgage lenders depend on the type of mortgage, the institutional or private lender used, the cost of the property, and a plethora of other factors. The following information discusses the main duties of mortgage lenders in Canada, as well as various types of mortgage loans, mortgage loan rates, and how to find the best Canadian mortgage lender. The biggest mortgage lenders in Canada are the big five Canadian banks.

Types of Canadian Mortgage Loans

Mortgage lenders in Canada typically finance three types of mortgages – conventional mortgages, high-ratio mortgages, and second mortgages - all of which are offered for commercial or private properties. In general, conventional mortgage loans offer the best rates, primarily because they constitute the lowest risk for the lender, as 25 percent of the purchase price must be paid by the buyer up front. High-ratio mortgage loans tend to have higher rates than conventional loans because the buyer has to put less down, making the total amount of the mortgage, and the overall risk incurred by the lender, much higher. Second mortgages tend to have higher rates than conventional and high-ratio mortgages loans, as they are commonly used to get homeowners out of financial trouble, and are therefore an indication of desperation on behalf of the applicant and higher risk for the lender.

What are Private Mortgage Lenders

Canadian private mortgage lenders are similar to informal investors, in that they provide short-term loans for investments that are backed by assets (real estate). Private mortgage lenders do not usually base their loan approval decision on the applicant's credit, as the property is a form of collateral, and the loan is therefore granted based on the equity of the property. Canadian mortgage lenders typically provide short term mortgage loans that last between 6-12 months, whereas conventional mortgages last much longer (most often in the range of 10-30 years). Even though the rates are usually higher than traditional mortgages, these short term loans are ideal for some real estate investors because they're easier to gain approval for (require less documentation), and therefore do not delay the closing process.

How to Choose a Private Mortgage Lender The first step in selecting a good private mortgage lender is examining the market and comparing prospective rates and loans. By becoming familiar with typical rates and loan terms, it is easier to avoid settling for a loan that has unfair rates. After gathering a list of prospective Canadian private mortgage lenders, it is advisable to ensure the reputability of each lender by checking with the appropriate government authorities, including the Office of Consumer Affairs, and the Attorney General's Office of Justice. Using the internet to find a list of reliable and fair mortgage lenders in your area is perhaps the easiest way to minimize the amount of time and risk it takes to find the right loan for your property. It should be noted that even individuals with bad credit can be approved for private mortgage loans that have fair rates, so you should never settle for a scam just because your credit is not perfect. You can also get mortgage offers from Canadian mortgage brokers.