Often, Canadian farmers who do not qualify for a conventional bank loan can raise the funds they need for their agricultural ventures by securing a loan from private mortgage lenders in or around BC. Private mortgage financing is often easier to obtain in certain circumstances, and can be obtained quicker in many cases as well.
Canadians often ask how they are able to obtain a private money mortgage from lenders in BC. , and more specifically, want to know how private money mortgages can be advantageous to them. Private money mortgages are loans secured by real estate made by a private lender/investor instead of a bank, lending institution or government agency. Private money mortgages loans are short-term (generally six months to two years) asset based loans made to the professional real estate investor for the purchase, rehabilitation or equity cash out of real property. Westrock Capital works with many private mortgage lenders in and around BC who are interested in lending money to Canadian farmers.
The decision to lend with a private money mortgage is based on the equity and value of the property being put up as collateral, not on the borrower’s credit. This is beneficial to borrowers who may not have good credit. The security for the loan is based upon fact that the loan will be for no more than 65%-75% of the appraised value of the income-producing property. Non-income producing property (generally land or vacant commercial property) can expect a loan to value of no more than 55-65%. Interest rates can be expected to be considerably higher than conventional loans, usually 4-6% above prime with interest only monthly payments.
Canadian farmers who come into Westrock Capital often ask why anyone would be interested in obtaining a loan of this nature. The answer is actually simple. In cases where a farmer has had problems qualifying for a traditional bank loan in the past, a private money mortgage can be the answer to obtaining the funding necessary for their agricultural venture. If the borrower and/or the income of the property do not qualify for a traditional mortgage loan, a private money mortgage might actually be the best answer, especially if there has been credit trouble from the borrowers past, excessive debt or the property is not producing a sufficient cash flow to covert the proposed. In these cases, private mortgage lenders in BC may be the only available source for funds.
While a traditional lender may look to the property, the borrower and his/her credit, private money mortgage lenders in BC are concerned with the appraised value. As security, the property is producing or can produce sufficient income to pay the note and the value of the property leaving the issues of the borrower's credit or income as a less important factor in providing the loan.
If you’ve been turned down for a loan in the past but still need to raise funds for your agricultural venture, consider contacting a loan specialist from Westrock Capital, at 877.995.1829. We’ll answer all of your questions for you and help you determine what the next best step for you would be in order to secure the finances you need on your farm.