New condos in vaughan . Can I get a private loan if there are not enough bank loans? It has been a turbulent and dramatic year for the Ontario real estate market.
From a 15 per cent real estate speculation tax on non-residents in the Golden Horseshoe region (the introduction of 16 NRST, Non-Resident Speculation Tax) and real estate market controls, to two consecutive interest rate increases by the Bank of Canada, to the stress test (B20) on mortgage applicants from January 1 this year. The follow-up effects of these policies are beginning to show in 2018. At the beginning of last year, buyers who queued up overnight and paid tens of thousands of yuan admission fees to buy uncompleted flats worth millions of yuan were already facing a reduction of 30 to 500000 in value a year later. Some people face the handover but do not have enough money to complete the handover because of the lower valuation of the house by the bank, resulting in a reduction in the number of loans. These people have no choice but to turn to private lending (private lender/Shadow Lending).
Private lending is called “Shadow Lending” in English. Literally, it is not difficult to understand shadow lending, implying some secret and hidden transactions, which means that this is private lending outside the traditional financial institutions that we usually use, and some people call it “usury”. When it comes to usury, people can’t help thinking of thugs with sticks and racketeering. But this is the plot that we think of only when we are influenced by movies and TV dramas. As traditional mortgages in Canada become more and more difficult, and as a result of government policy intervention, there is more room for alternative bank loans to provide solutions for customers who cannot get loans normally. Is it safe and reliable to do private lending in Canada, what are the advantages and disadvantages, and which groups are suitable for it? Perhaps this is a topic that buyers who are anxiously preparing to hand over new houses and lack of money under the influence of the new policy need to pay attention to.
Private lending is a very broad concept. The Bank of Canada pointed out that private lending is a series of lending activities outside the formal banking system, performing functions similar to those of banks. Any private borrowing can be called “private lending”. Borrowing money between relatives and friends also counts as a private loan. For example, nowadays it is very difficult for young people to buy houses entirely on their own income. Parents give 100000 Canadian dollars as a down payment, with this loan, parents also become “shadow borrowers” (shadow lenders).
Of course, more often, we need to use private professional private lending institutions to meet urgent needs. Private lenders usually operate on the basis of home mortgages and risks. Of course, they offer loans at higher interest rates than traditional mortgages. But if the bank rejects your loan application for some reason, or if there is a draconian loan policy such as the B12 stress test, when your loan qualification is no longer qualified and your request is rejected, can you, who have already paid tens of thousands of deposits, give up the deal altogether? Or consider more options?
