Private Mortgage
Definition
A private mortgage is short-term financing from an individual investor or mortgage investment corporation rather than a bank, secured mainly by the property's equity.
How it works
Private lenders focus on the property and the exit plan rather than income documentation, credit history, or the stress test. That makes them useful when a deal is time-sensitive, the income is hard to document, or the credit is temporarily damaged.
The cost reflects the risk. Rates are meaningfully higher than bank rates, lender and broker fees are charged upfront, terms are typically six to twenty-four months, and payments are often interest-only.
A private mortgage should always be a bridge with a defined exit: repairing credit, completing a renovation, selling, or stabilizing income so the file can move to an alternative or prime lender at renewal.
Quick facts
- Approved on equity and exit strategy, not the stress test.
- Higher rates plus upfront lender and broker fees.
- Short terms, commonly 6–24 months and interest-only.
Put this into practice
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