Private Lending - Private Lender - Last Resource

A private lender should be used as your last resource. It is usually not accessible to the general public so if you are interested in learning more, email us at 1dayapproval@gmail.com

There are three key factors

1. Credit: applicant's credit should range 420-700
2. Income: usually applicant cannot prove their 'hard income' (your goverment taxable income shown you T1)
3. Property: residential, small commercial, light industrial, factual interest (Party A divorcing Party B, joint tenancy (undivided interest) thus becomes factural interest as 'tenants in common'

FACTS ABOUT PRIVATE LENDING MONEY

The rate from private lenders would range from 9% - 14%, and whereas most lending/financing does not cost a fee, a private lender would charge a standard 2% rate on the borrowed sum.

The maximum loan is 90% of the purchase price. For equity take out (refinancing), the loan-to-value ranges between 80-85%.

If the private money is used for 1st mortgage, the interest rate ranges from 7.25-12%

If the private money is used for 2nd mortage, the interest rate ranges from 9.5% - 14%, and the equity take out will range from 10.5% - 16%. The additional fees will be higher as well for a 2nd mortgage refinancing or purchasing.

Again, private lending should always be used as the last resource for borrowing because of its interest rate. However, mathematically, it does not raise your 'average interest' drastically as you would think, and it makes your deal work! For instance, an investor can afford 15% of the down payment and needs another 10% from private lender to make the purchase work, the overal "average interest" on mortgage(s) will not as high as it seems.

A friendly suggestion to all home buyers and real estate investor, unless you can pay down 35%, it is wise to obtain a 'mortgage pre-approval' to understand your price range. It is free and you can lock the lower rate for 120 days.