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Overview of Private Mortgage Refinance

At MBLAW, we understand that not everyone’s financial circumstances fit into the traditional mould. Private mortgages, financed by individuals or corporations rather than banks or credit unions, can provide much-needed flexibility. They are an excellent option for those who are self-employed, have a lower credit score, or require a quicker turnaround on financing. However, it’s crucial to remember that this ease of access comes with higher interest rates.

We pride ourselves on fostering strong relationships with private lenders over the years. Our experienced team of lawyers at MBLAW can help navigate the unique aspects of each private mortgage transaction. We work closely with lenders who understand your specific circumstances, providing tailored solutions that fit your needs. With us, you’ll have the support you need to make informed decisions about your financial future.

Who Can Benefit?

Private mortgage refinancing is on the rise in Canada and is fast becoming a go-to solution for those looking to meet their financing needs. Traditional mortgages might not always serve your unique situation. This is where the customization that private lending offers can make all the difference.
Private mortgage refinancing can be an ideal solution for a range of individuals with diverse needs. Here are some profiles who might find this option particularly beneficial:

Self-Employed Individuals

For those running their own businesses, private lending can provide the necessary flexibility that traditional banks often do not offer.

Credit-Challenged Borrowers

Individuals with lower credit scores can find the acceptance they need with private lenders who are more understanding of their circumstances.

Tax Arrears

If you have outstanding arrears payable to the CRA or property taxes due, a private mortgage refinance can provide the funds you need to clear these debts.

Dealing with Bankruptcy or Consumer Proposal Debt

Private lending can be a lifeline for those working to pay off bankruptcy or consumer proposal debts.

Construction Financing and Commercial Loans

Whether you’re building a new home or investing in a commercial property, private lending can provide the funds you need when you need them.

Short-Term, No Penalty Financing

If you’re in need of short-term financing and want to avoid penalties for early payoffs, private lending can be an excellent option.

Private Mortgage Refinance Process: A Step-by-Step Guide

Whether you’re a lender or a borrower, private mortgage transactions require meticulous planning and execution. At MBLAW, we’ve amassed a decade’s worth of experience and expertise, ensuring a comprehensive approach to meet your unique needs.

01.

Get in Touch

Begin by reaching out to MBLAW through our contact form. Make sure to specify whether you’re a lender or a borrower interested in a private mortgage transaction.

02.

Setting Expectations

Upon receiving your contact form, one of our team members will touch base with you to confirm whether we can meet your timeline. We’re dedicated to providing you with a solution that works within your schedule.

03.

Retainer Agreement and Document Collection

Once we’ve agreed on a retainer, we’ll guide you in gathering the necessary documents needed to move forward with the transaction. Our team is here to make this process as seamless as possible for you.

04.

Legal Consultation

A few days before your funding or closing date, you’ll meet with one of our lawyers to go over all the paperwork. They’ll help you understand everything you’re signing, ensuring transparency at every stage.

05.

Closing Day

On the closing day, your mortgage will be officially registered. If you are the borrower, the funds will be disbursed on this day, marking the successful completion of the transaction.

06.

Final Report

Within a month after closing, our team will provide you with a final report summarizing the transaction. We remain committed to keeping you informed and satisfied even after the process is complete.

Private Mortgage Refinance: Frequently Asked Questions

A private mortgage can offer a solution for those who are self-employed, retired, have credit issues, lack credit history, or are on a tight timeline. It can also be a feasible option when the property itself is considered high risk, or if the funds are needed for a construction loan. Although you still need to meet the lender’s criteria, private lenders tend to be more flexible than banks with their requirements.

A private mortgage carries similar fees to a regular mortgage refinance with a bank, which include appraisal fees, broker fees (if applicable), lender fees, and legal fees. While private mortgages can be more expensive than conventional bank mortgages, their flexibility often justifies the higher borrowing costs.

For private mortgage transactions where the borrowed amount exceeds $50,000, both the lender and borrower are required to have separate lawyers. This ensures unbiased representation and avoids potential conflicts of interest. However, for loans under $50,000, both parties can share the same lawyer to cut down on legal fees. Despite this, many private lenders prefer separate legal representation for their own protection.

Before signing a private mortgage commitment, we strongly recommend that you have a lawyer review it. Be aware of any administrative fees charged by the lender, which can accumulate significantly by the time you’re ready to pay off your mortgage. Also, watch out for penalty fees for ending the loan before the maturity date, and understand the terms and cost structure of the private mortgage.

Whether you can pay off your private mortgage before its maturity depends on the terms of your agreement. Some private mortgages are fully open to prepayment, but these usually come with higher interest rates due to the uncertainty of how quickly the loan will be repaid. If your private mortgage is closed, there’s usually a penalty associated with early payment.

Yes, a private mortgage can be refinanced, but it’s important to understand that this process may come with additional costs. These might include prepayment penalties for paying off the existing private mortgage early, plus the usual costs associated with taking out a new mortgage, such as appraisal fees, legal fees, and possibly broker fees.

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