A hard money loan in Canada is a specific type of equity/asset based mortgage financing secured by real estate. We write Canadian hard money loans, which are often a bit misunderstood.
In Canada, hard money loans are usually issued by private investors or MICs (mortgage investment corporations) that pool private investment funds. They are made to homeowners that have been declined by banks and traditional borrowers for any number of reasons, such as unemployment or challenged credit. Accordingly, the interest rates on hard money loans are considerably higher, given the higher risk being taken by the hard money lender.
Because the interest rate on a hard money loan is typically not sustainable, they should be considered a short-term or ‘bridge’ solution, suitable for interim financing or projects that will be lasting a few months.
Canada hard money loans are suitable for short term goals, getting up-to-date on existing financing, completing a deal or staving off bankruptcy or foreclosure proceedings.
Qualifying for a hard money loan in Canada varies widely by lender and loan purpose. Traditional mortgage details and documents, such as income, debts and credit score, are typically used to drive the interest rate but it is the property equity that drives the approval. A mortgage broker that is knowledgeable about this type of financing is going to be able to shop your file to the widest number lenders, and have an intimate knowledge of what is important to each one.