Harpreet’s perspective
Real questions. Real properties. Real numbers.
Let's start with the obvious. Private mortgage financing is generally not where I want you staying forever. Rates can be higher than traditional financing. There may be lender fees, brokerage fees where applicable, appraisal expenses, legal costs and other borrowing costs.
So why would anyone use it? Because sometimes you don't need the cheapest money. You need money that solves a particular problem.
Why Are We Going Private?
Bank declined the deal? Need a fast closing? Strong property equity but complicated income? Credit issue? Short-term bridge? House flip? Major renovation? Property doesn't currently fit traditional lending? These can all lead to very different private mortgage conversations.
Before finding the lender, I want to diagnose the problem. Because ‘I need a private mortgage’ isn't really the problem. Something caused you to need one. That's what I want to understand.
What Does the Private Mortgage Actually Cost?
Please don't look only at the interest rate. I want the complete picture: interest, lender fees, brokerage fees where applicable, legal expenses, appraisal costs where applicable, term, payment structure, renewal or extension considerations, and any other relevant costs or conditions.
Then we calculate what we're actually paying for the period we expect to use the money. If we're paying premium pricing, I want the money accomplishing something important.
The Exit Strategy Comes Before the Mortgage
Before getting you into private financing, I'm going to ask: ‘How are we getting you out?’ Maybe you're selling the property. Maybe you're completing renovations and refinancing. Maybe your credit needs time to improve. Maybe you need stronger income history. Maybe another property is selling. Maybe we're eventually moving into alternative/B lending and then traditional financing.
Whatever the strategy is, I want it discussed before Day One. Not in month eleven of a twelve-month mortgage when everyone suddenly discovers the calendar.
What If Plan A Doesn't Work?
What if the renovation takes longer? What if the property doesn't sell? What if the appraisal comes in lower? What if your financial situation doesn't improve as quickly as expected? What is Plan B? Private financing should ideally be a bridge. And before I put you on the bridge, I'd like to know there's another side.
Fast When the Deal Allows It
Private financing can sometimes move very quickly. In the right circumstances, a private mortgage may potentially close in as little as 24 hours. That is not guaranteed. Timing depends on the lender, property, equity, appraisal requirements, documentation, legal work and overall transaction.
Tell me the real deadline. If I think we can move quickly, I'll push. If we can't, I'll tell you. Aggressive on getting the deal done. Serious about due diligence. Because getting into private financing is one transaction. Getting you successfully out of it is the strategy.