When considering private mortgages as an option for the purchase of a
Toronto home, it is important to consider the bigger picture. As is the case with
all mortgages, there are hidden fees attached to them and should be considered
when doing any sort of investing. Interest accumulation is not the only way
lending companies make their money, and it is important to know that. There are
many kinds of additional fees that can be connected to your private mortgage
depending on the lending company you decide on, and a short list of common ones
can be found here.
A lending fee is a common additional cost attached to private mortgages. The
charge is self-explanatory, as it is just a payment of money to the lender for
the service they are providing for you. These fees can differ from company to
company, but usually sit between one or two percent. It is not rare for this
fee to become greater if the loan is relatively small or complex.
Legal fees are typical of all mortgages, but can easily be forgotten in the
whirlwind of paperwork and documents that need to be done. Legal representation
is required for the drawing up of the mortgage agreements to ensure the fine
print and details are correct and agreed-upon. Depending on the private
mortgage company, some borrowers may have to pay for not only their own legal
fees, but the fees of the lenders as well. This cost can vary depending on the
law firm you choose to represent you, but can cost upwards of one thousand
When buying a house, it is not uncommon for potential buyers to have the property
appraised themselves to ensure that the price of the house is in line with the
market value of the home. When getting a private mortgage, this is essentially a
mandatory process as lending companies want to ensure that they do not offer or
provide the borrowers with a mortgage that is more than the price of the house.
This appraisal value will also be important when deciding on other fees, such
as the lending fee.
Property Inspection Fees
It is important when buying a home to have the property professionally
inspected prior to finalizing the sale of the home. Many real estate agents
will remind buyers to add a property inspection clause into the offer on the
house, but not all buyers use agents and can potentially forget. Property
inspectors ensure that the house is in perfect working order, and identify any
immediate or future problems that the house may have. Fees for property
inspectors generally differ from business to business, but will be an important
investment regardless of cost. Some private lending companies may mandate an
inspection prior to finalizing the mortgage in order to ensure that borrowers
are not purchasing a property that will soon require expensive repairs.
Like all mortgages, private mortgages for Toronto homes can come with a variety
of fees that go unnoticed. It is important to consider these fees when
investing in any mortgage, as they can place the borrower even farther into debt
if they are forgotten about.