Banks primarily offer mortgage loans for general residential purposes such as purchasing or refinancing a home. Loans from banks are offered at lower interest rates but they tend to have strict qualification criteria. Specialized loan offerings with banks, such as construction loans, will have strict requirements for qualification, conditions, and ongoing management of the loans. For example, the borrower needs to have a sufficiently high net worth relative to the loan amount, the builder needs to have strong and demonstrated construction experience, the loan amount needs to be low relative to the project cost and value.
Private lenders are considered alternative lending vehicles to banks / institutional lenders. A private lender typically offers mortgage loans for a wide range of purposes including purchase and refinancing of a home, land acquisition, bridging, and construction, and with less stringent qualification criteria than banks do. This flexibility makes private lending a great option for individuals that are considered too “risky” based on traditional measures. Loans with private lenders tend to be more tailored to an individual borrower’s needs but have higher interest rates to account for the higher perceived risk.
Morrison Financial is a private lender primarily servicing Ontario for various types of real estate transactions.