- A lender who is not affiliated with a bank or traditional lender, and who may or may not normally be in the business of providing loans. Private lenders are not as constrained by regulations as traditional lenders are and can approve ventures that traditional lenders cannot. Private lenders and financiers often charge higher interest rates and fees than traditional lenders due to the higher level of risk they expose themselves to. Also known as "private financing."
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Related Terms and Acronyms
- Creative Financing — Definition,
- An innovative or unusual way of structuring a home loan that allows the buyer to buy the house.
- Interest Rate (IR) — Acronym, Very Important,
- The rate a lender charges an individual to borrow money.
- Lender — Definition,
- The bank or mortgage company offering the loan.
- Loan — Definition,
- Letting another party use something of value temporarily.
- Low-documentation Loan — Definition,
- A mortgage that requires less income or asset verification than conventional loans. Low-documentation loans are designed for the entrepreneur or self-employed, for recent immigrants, or for borrowers who cannot or choose not to reveal their financial information. A substantial down payment and excellent credit history are generally required. This type of loan will also yield a higher interest rate.
- Mortgage Broker (MB) — Acronym, Important,
- One who finds clients perspective lenders at generally no cost. Mortgage Brokers have a special relationship with lenders and can offer their clients the best rates and service. CanEquity goes through great lengths to ensure you are serviced by the best Mortgage Brokers in Canada.
- Mortgage Rate — Definition, Very Important,
➥ You can compare mortgage rates using this website by clicking 'Rates' above.
- The interest rate on a mortgage loan.
- Mortgagee — Definition, Important,
- The lender in a mortgage transaction.
- No Money Down Mortgage — Definition, Important,
- Available in Canada as a true 100% mortgage financing product.
- No-documentation Loan — Definition,
- A mortgage in which the applicant provides a minimum of information -- name, address, Social Insurance number (so credit reports can be pulled), and contact information for an employer, if there is one. The underwriter decides on the loan based on the applicant's credit history, the appraised value of the house and size of down payment.
- Pre-approval — Definition,
- A process that mortgage lenders use to determine how much money they would lend you based on a thorough review of your financial situation. Lenders issue a pre-approval letter which strengthens your position when bidding on a home, as it shows sellers that you will be able to raise funds needed to purchase.
- Prime Lending Rate (PLR) — Acronym, Very Important,
➥ Bank of Canada's prime (best) lending rate.
- The rate of interest charged on loans by chartered banks to their most creditworthy customers.
- Shared-Appreciation Mortgage (SAM) — Acronym,
- A mortgage loan where the lender or a third-party backer agrees to offer a highly reduced mortgage rate to the borrower in exchange of sharing profits when the property is sold.
- A home loan in which the lender offers a below-market interest rate in exchange for sharing in the profit when the home is sold. Usually done only with private funds/lenders.
- Sub-prime Mortgage — Definition, Important,
- A mortgage loan that is granted to a borrower who is considered sub-prime (has a less-than-perfect credit report). Sub-prime borrowers have either missed payments on a debt or have made late payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may default on the loan.