“Don’t Assume That All Private Mortgage Financing Options Will Be Similar”

Unlike bank and commercial mortgage lenders where there may not a lot of variation in rates and terms for a given mortgage request, private mortgage lending can have extreme differences in rates and terms among different lenders.

First of all, in terms of interest rates, different private lenders will be trying to secure a different interest return on mortgage funds extended, sometimes with no allowance for differences in risk. Some private lenders are only going to lend their money out at 12% while still others will adjust the rate according to the quality of the application and the related risk of providing financing for a particular situation.

The challenge for the borrower is to know what is competitive and what is not for a given scenario. For very competitive properties, you may be able to secure private mortgage financing anywhere from 6% to 12% and anywhere in between. The key here is that the property and financing scenario needs to be very attractive to the lender to create the opportunity for access to the lower private mortgage lending rates. The challenge is trying to find that source or sources of private funds that can offer lower rates for lower risk.

At the same time, if a property is not very competitive in terms of lender interest, any private mortgage deal that you can find may end up being the best you can do, regardless of interest rate.

With respect to private mortgage terms and conditions, some private lenders will only consider one year terms, others will look at longer interest periods. Some will renew for additional years, but only after you pay a renewal fee while others will provide renewals for no renewal fees. And still further, the renewal fees can vary considerably from one lender to the next.

For early repayment, the average private lender will charge a 3 month interest penalty, some will consider the mortgage as open from the outset or after a certain period of time with no prepayment penalties.

The point here is there exists a lot of variability in private mortgage financing commitments. The better the property and the more time you have to work with, the better the deal you’re likely going to secure.

In order to quickly figure out where you’re private mortgage lending request fits into the market place, you’re well advised to work with a Toronto Mortgage Broker who has great access to a broad spectrum of private mortgage lenders that are interested in financing the type of property you’re working with.

Click Here To Speak With Private Mortgage Broker Joe Walsh