Hard money lenders are thriving in Canada, and with good reason! But it’s important to make sure that you speak with a Toronto mortgage broker before you start look at a hard money lending solution. Here we’re going to talk about these types of lenders and what hard money lending is. Remember: don’t choose this type of financing before you speak with a professional!
What is Hard Money Lending?
Hard money lending is what is known as “asset based financing”, meaning a piece of property like a home or land is used as collateral. This can be a house you own now that is on the market while you’re trying to buy a new one. These are technically also “bridge loans” or “bridge mortgages”. You’ll be able to borrow up to 70% of the worth of the property. So if you own a property worth $1,000,000 and you want to get a hard money loan against it, you’ll be able to get up to $700,000. But this is only if you have a really good Toronto mortgage broker on your side (like us!) to make sure you’re getting the maximum amount of money for your property.
What Are the Criteria for Hard Money Lending Lenders?
Hard money lending criteria vary depending on what lender you select for your hard money loan. They can use traditional things like your credit score, collateral (how much the property you’re using as collateral is worth), income, employment and a myriad other things. It will really depend on who you approach, but it also depends on who acts as your intermediary. You can always try to find a good hard money lender on your own, but you’re going to need a mortgage broker to help you find the best of the best. No two situations are the same and you’ll need to be paired with a lender who will understand your unique circumstances.
Who are Hard Money Lenders?
Hard money lenders are usually private companies or individuals who provide borrowers with short term loans. They’re known as bridge loans because they typically don’t last very long and need to be repaid in a shorter time than a traditional mortgage; you’d be hard pressed to find a 30 year hard money loan. These kinds of loans are riskier for the lender than a traditional loan, so interest rates may be higher than a mortgage you receive around the same time.
What are Hard Money Loans Used For?
Hard money loans are generally used to “bridge” the gap between traditional financing and the borrowers own money. For example if a borrower has a down payment and a financing from a traditional lender, but can’t afford an extra $12,000 to buy a property until their first home sells, they can get a bridge mortgage or a hard money loan. It’s important to make sure that the hard money lender that you’re dealing with is on the level. Let us help! As Toronto mortgage brokers we have the relationships and knowledge to get you the best hard money loan; contact us today and find out more.