Private Mortgage Pricing
“Private Mortgage Pricing Is Based On Risk And Speed”
Private mortgage pricing tends to be a combination of risk and speed for most private lenders.
Some private lenders will require a higher cost of funds and as a result, they must gravitate to the area of the market that will provide that type of return.
On the other end of the spectrum, there are private lenders that are very risk averse and will provide funds at rates close to what banks and institutional lenders will provide, but the risk needs to be very low and the the borrower needs to be prepared to go through a longer due diligence process.
Private mortgage pricing is an often miss understood area of private money lending.
The most common point of view is that private money is going to be priced at 10% or higher for first mortgages and 12% or higher for second mortgages.
And while this might be true in terms of the averages, there is a wide range of values around these numbers that can apply to a variety of funding scenarios.
If you have the time to go through the application process, and do not require a high loan to value ratio on good, solid, marketable property, the private mortgage pricing range is more likely to be in the 6% to 8% range for a first mortgage.
But if you’re in a hurry and need funds in a matter of days, then the pricing can get into the 12% to 14% range for first mortgages.
Every private lender also has their own unique way of looking at the market, pricing risk, and determining what they want to get for a return on any particular deal.
So the key here is finding the right fit for any one particular deal and being prepared for the pricing range the deal is likely going to fall into based on risk and timing.
The best way to accomplish private mortgage placement is through an experienced mortgage broker who can quickly assess your situation and put you in touch with private lenders that fit your needs.
Trying to locate private money on your own can not only be difficult to accomplish, it can also result in a less than ideal borrower/lender fit.
If you want to know more about private mortgage pricing for a current or future residential or commercial property financing requirement, I recommend that you give me a call so I can quickly go over your situation with you and discuss private mortgage financing options available to you.
About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel