CRE Magazine did a short overview on private mortgages. Among its notable points:
- Private lenders look primarily at the quality of the property itself, your equity in it, and your apparent ability to repay to loan.
- Your credit score is less important.
- Location matters. “In inner-city Calgary, a property would turn over very rapidly, so we would be willing to go to 85% (LTV), whereas in small-town Alberta, we would look at what’s in that town and we might only go to 65%.” – Chuck McKitrick, CEO of private lending firm Alta West Mortgage
- With private mortgages, CRE says: “you’ll pay higher interest rates and possibly broker/lender fees, and the term of your private mortgage won’t exceed a year.” (Note: sometimes privates will go longer, but you may not want to, given their interest rate.)
- There’s a story to every borrower who uses private lending says MortgageLand’s David O’Gorman. “If there wasn’t a story, they’d be going into an institution to get their money.”