Private Mortgage Calculator
Enter the value of your existing property
Enter the amount of your first mortgage
registered on the property.
Enter the amount of your second mortgage
registered on the property (if any).
Total amount of mortgages that are registered
on the property.
Loan-to-Value Ratio (LTV)
Total amount of mortgages that are registered
on the property.
Total amount available as equity in the property.
Loan Amount Needed
Enter the amount that you need to
Enter the expected interest rate.
Interest rate may vary depending on the Loan-to-Value (LTV) Ratio, your credit score and other factors. With Loan-to-Value ratios under 80%, your interest rate may be as low as 6.99%. However, with LTV's above 80%, private mortgage interest rate may be as high as 11.99%.
You can either make monthly interest payments
or you can roll the interest into the Private
Mortgage Amount upfront
Make Monthly Interest Payments
Interest is Pre-Paid / No Payments
Cash You Receive
Total amount of cash that you will receive
upon taking out a Private Mortgage
The amount that you would be charged as interest
monthly throughout the duration of the mortgage
Private Mortgages In Canada
What Exactly Are Private Mortgages?
Before indulging into what private mortgages are, it is a good starting point to know the difference between a regular lending institution (like a bank or credit union) and private lenders. Traditional banking institutions (major banks & credit unions) are harder to win over through a mortgage application because they want their borrowers to possess an excellent financial standing (outstanding income, credit rating, owned assets, lump sums of money saved, etc.). With the costs of living nowadays, not everyone has a ‘stellar’ financial standing, whether it be a bit of debt, a smudged credit rating, a steady-but-middle-class income, self-employment, and so on. In this case, the private lenders are the ones who step up to financially back these home buyers.
Private lenders deal in private mortgages, which often is the answer for borrowers that are not able to get mortgage loan approval from banks. Does dealing with a private lender cost more? Most often the answer is yes…private lenders are taking a bigger risk loaning out enough money to purchase a home to a borrower who has had past or present credit issues, borrowers that do not have a down payment for the mortgage, and so on. Private lenders tend to only indulge in short term mortgage loans that are backed up by borrower-owned assets and of course, the home being purchased pledged as a security in the event of a default.
The Mayhem of Mortgage Types!
You have already discovered that there are quite a few kinds of mortgage types, but the mortgage basics and which ones you would qualify for can be understood more easily when simplified.
Fixed Rate Mortgages
When juggling a semi-tight budget, a fixed rate mortgage may be just right for you because it features a ‘fixed’ interest rate that does not fluctuate during an agreed-upon term of the mortgage. Is the interest rate higher for a fixed rate mortgage? Yes, the security of knowing your payments will remain the same month after month comes at a price, which is reflected in the interest rate offered by a lender.
Variable Rate Mortgages
A popular choice with many home buyers, a variable rate mortgage is stable in the sense that it too keeps the monthly payments regular and without fluctuations, but the interest rate is pinned to the movement of the prime rate. Any changes in the prime rate (rises or falls) are adjusted to the principal amount of the mortgage. Variable rate mortgages monthly payments are stable for budget-minded mortgagees and often carry a slightly lower interest rate then a fixed rate mortgage, which is a savings right at the start!
Adjustable Rate Mortgages
If you like the idea of your mortgage and the monthly payments to reflect any changes with the prime rate (and reviewed at regular intervals to ensure accuracy), then the adjustable rate mortgage may be best for you. The adjustable rate mortgage is set to the prime rate and any movement with the prime rate automatically ‘adjusts’ your monthly payment amount and your monthly interest rate. One of the benefits to this type of mortgage is your mortgage is always current; there are no surprises tacked onto the principal amount.
Years ago, it was only possible to get a conventional mortgage, as this mortgage type requires the borrower to have at least a 20% down payment upfront, leaving the lender to only have to loan out the other 80%. When home mortgages came to fruition years ago, borrowers had to provide at least a 50% down payment…how times have changed!
This mortgage is a great option for a home buyer that wants the perks of a variable rate mortgage with the option to switch over to a fixed rate mortgage if the prime rate is expected to rise, locking in a lower interest rate for a term.
This mortgage is also a combination of a fixed rate mortgage and a variable rate mortgage with a kicker… part of the mortgage loan is financed at a variable rate and the other part of the mortgage loan is financed at a fixed rate. The perks of a hybrid mortgage (or 50/50 mortgage) is stability, it may be a bit tricky when the time comes to renew a term, but the ability to benefit from the potential of the prime rate falling is sometimes irresistible and a savvy strategy!
Open and Closed Mortgages
Open mortgages give you flexibility when it comes to making large, random payments, or accelerated payments to pay the mortgage off sooner.
Closed mortgages, as opposed to open mortgages, do not give you much room for any negotiating before the end of the term, zero tolerance for any early payoff, additional payments or a lot of flexibility during a mortgage term.
High Ratio Mortgages
This mortgage is the opposite of a conventional mortgage; in other words, a high ratio mortgage is basically the borrower having less then a 20% down payment which forces the lender to cover a higher ratio of the loan amount. By law, anyone who has a high ratio mortgage is required to obtain mortgage default insurance. On the positive side, many borrowers are opting for mortgage default insurance so that any down payment they have can be held back and used for unexpected closing costs, maintenance, repairs, or upfront minor renovations.
The craziness of the mortgage market can easily be tamed by approaching a mortgage professional that can pass along their expertise in this industry to you. Private lenders that deal in private mortgages is just the tip of a very large iceberg as there are just as many private lenders as there are mortgage types! It is a smart way forward to investigate different private lenders to ensure you can access the opportunity to negotiate the very best mortgage for you and your family. A mortgage is a big commitment, not only financially, but taking on home ownership has its pros and cons.