Agents and financial planners -> Private money lending

Private money lending

Private money loans are available for borrowers and/or properties
not financeable by conventional lenders.

Private money, or ‘hard money’ lending, provides mortgage loans to borrowers who cannot be approved for a mortgage through a conventional lending source. Private money loans are generally made by companies that specialize in these types of loans. These companies aggregate funds that come from individuals, or small groups of individuals, often through their private pension plans.

Private money lenders look primarily to the property, not the borrower, for security. It is unusual for a loan to be made if the loan-to-value exceeds 70%. However, private money loans can be securitized by more than one property, unlike conventional loans, and the loan-to-value is then figured for total debt and combined value of all properties. Private money loans can also close more quickly than conventional loans.

Private money loans have much higher interest rates and fees than a conventional mortgage, and are usually written for a shorter term, with interest-only payments for as little as 6 months and up to 5 years before the loan is due.

Scenarios where a private money loan might be the only alternative:
  • Borrowers with credit challenges
  • Borrowers who don’t qualify with a conventional lender, because of issues around length of employment, income, assets, number of properties financed, etc.
  • Properties under construction, land being prepped for development
  • Situations where the borrower has to collateralize more than one property
  • The borrower is a corporation, an irrevocable trust, a foreign national, or an estate

I have many years of experience in private money loans as both a lender and an investor. If you are interested in private money either as an investor or a borrower, please contact me.