Private Mortgages: When They Make Sense

Traditional lenders said no—or you need financing quickly for a unique situation? Private mortgages might be the solution. Here's when they make sense and what to watch for.

What Is a Private Mortgage?

A private mortgage is a loan from an individual or private company rather than a bank or traditional lender.

They're used when conventional financing isn't available or practical.

Common Scenarios for Private Mortgages

• Credit challenges: Bankruptcies, consumer proposals, poor credit
• Income verification issues: Self-employed with complex income
• Property issues: Unique properties banks won't finance
• Bridge financing: Short-term needs between transactions
• Quick closing needed: Faster than traditional lenders (sometimes days)

How They Differ from Traditional Mortgages

Need Financing When Banks Say No?

Explore private lending options. We only recommend private when it genuinely helps your situation.

Costs to Expect

Private mortgages come with higher costs:

• Lender fees: 1-3% of loan amount
• Broker fees: Often paid by borrower
• Legal fees: May be higher
• Interest rates: Significantly higher than banks

These costs are justified when private financing solves a real problem—but be clear on the total cost.

Exit Strategy Is Critical

Private mortgages are short-term solutions. You need a clear plan to:

1. Refinance to traditional lender – Most common exit
2. Sell the property – If that's your plan anyway
3. Pay off the mortgage – If funds become available

Without an exit strategy, you risk renewal at even higher rates.

Protecting Yourself

When considering private lending:

1. Work with an experienced broker – We know reputable private lenders
2. Understand all fees upfront – No surprises at closing
3. Have a clear exit strategy – Don't get trapped in high rates
4. Get independent legal advice – Protect your interests
5. Know your rights – Private borrowers have protections

When It Makes Sense

Despite higher costs, private mortgages can be valuable:

• Preserve your home from power of sale
• Complete a purchase when timing is tight
• Bridge a credit repair period
• Finance properties banks won't
• Access equity when traditional lenders refuse

FAQ

Q: Are private lenders legitimate?
A: Yes, when working through proper channels. We only work with reputable, licensed private lenders.

Q: How quickly can I get a private mortgage?
A: Often within days for simple deals. Urgency is a common reason people use private lenders.

Q: Can I renew a private mortgage?
A: Usually, but the goal should be to exit to traditional financing or sell. Repeated renewals are costly.

Q: What's the maximum I can borrow privately?
A: Private lenders often go to higher LTV (loan-to-value) than banks, sometimes 80-85%.

What's Next

Explore private lending options if traditional lenders aren't working for your situation. We'll ensure you understand the full picture and only recommend private when it's genuinely in your interest.