The Bank of Canada’s decision to raise interest rates for the fifth time this year is having a big impact on the mortgage market. With rates increasing, more borrowers are turning to private lenders for their financing needs.
Why Private Lending?
With the narrowing of interest rates between traditional lenders and private lenders, it may be advantageous for borrowers to explore a short-term solution with a private lender.
Private lenders typically offer rates that are higher than those offered by banks. However, many private lenders offer interest-only payments, versus standard principal & interest payments with traditional or bank lenders. In this increasing rate environment, interest-only monthly payments are often closer or less to what a variable rate mortgage would be with a bank. If your property has sufficient equity, private lenders can also explore the option of a payment holdback, which would further reduce monthly payment requirements.
In addition, Graysbrook Capital offers fully open loan terms, with no hidden penalties at the time of payout. This short-term option has become much more attractive in this rising rate environment. Not all private lenders offer fully open terms, however, so it’s important you look at all aspects of your contract.
With recent changes to the mortgage industry, some borrowers will have a more difficult time qualifying for traditional financing. Exploring alternative lending options that have more flexible criteria could be the best option for borrowers.
By taking advantage of Graysbrook’s expertise, and our extensive network of brokers throughout Atlantic Canada and Ontario, we can help! Contact your mortgage broker today about what is the best solution for you, or reach out to us and we would be happy to recommend one of our broker partners to assist you.