Private mortgages are legitimate financial products with a genuine role. They are also short-term and expensive, and the pressure that leads people to them rarely encourages careful reading. Slow down for these questions.
About the total cost
- What is the interest rate, and is it interest-only or amortising?
- What is the lender fee, and is it deducted from the advance or added to the balance?
- What is the brokerage fee, and how is it disclosed and paid?
- What legal, appraisal, and administration costs apply?
- What is the total cost in dollars over the full term, all in?
About the term and what follows it
- How long is the term, and what exactly happens on the maturity date?
- Is renewal available, and what fee applies if it is?
- Can the mortgage be prepaid early, and what does that cost?
- What happens if a payment is late — what fees or default rates apply?
About the lender and the paperwork
- Who is the lender, specifically, and what position will the charge take?
- Have I received the required disclosure documents, and have I read them?
- Has my own lawyer reviewed the commitment before I sign it?
The exit strategy is the whole question
Get independent advice
Private mortgage transactions require independent legal representation, and you should use it fully rather than treating the signing as a formality. If enforcement or a court deadline is involved, obtain legal advice immediately and in parallel with any financing discussion.
This article is general information only. It is not a commitment to lend, an approval, or legal, tax, or financial advice. Mortgage availability, rates, terms, fees, and approval depend on the applicant, the property, lender requirements, and applicable law. Please review your own circumstances with a licensed mortgage professional.