Private Mortgages

A private mortgage is financing provided by an individual, corporation, mortgage investment corporation or other non-traditional mortgage lender rather than a typical bank. It is often based more heavily on property equity and exit strategy.

Private financing may be considered for urgent closings, significant credit issues, tax arrears, short-term income problems, unusual properties, construction situations or other cases that do not currently fit institutional guidelines.

Usually yes. Private lenders generally price for higher risk and shorter terms, so borrowers may face higher interest rates, lender fees, brokerage fees, legal costs and appraisal costs.

Private mortgages are usually temporary arrangements. The actual term is set by the contract and may be short. Before proceeding, review the maturity date, payment obligations, renewal conditions and a realistic way to repay or replace the loan; an automatic renewal should not be assumed.

An exit strategy is a realistic plan to repay the loan when it comes due, such as a sale with enough net proceeds or refinancing for which you can reasonably expect to qualify. Improving credit or finishing renovations may support that plan, but does not itself repay the debt. The plan needs a timeline, costs and a backup if the intended route is unavailable.

No. Because private financing can be expensive, it should solve a clear problem and have a realistic repayment or refinance plan. I explain the costs and alternatives so you can decide whether the benefit justifies the expense.