Its not uncommon that individuals will call us looking for private mortgages for situations where 100% of the property value is required, and/or where the house is in very poor condition, and/or where there is very little potential to service the debt.
And when we tell them that we can’t help them with the scenario outlined, they sometimes get offended and challenge our competency as mortgage brokers, which is of course their right.
But the approach is hardly a realistic one.
Is it possible to find a private lender that would be prepared to provide financing against this type of scenario. Yes it is possible. Most things are.
Is it probable? No its not probable.
A Private mortgage lender is a business person or investor who’s goal is to make money while minimizing risk.
We are fortunate to deal with a large cross section of private mortgage lenders that each have their own focus areas, areas of specialization, and geographic target markets.
The key is always to match up the right borrower with the right lender in order to complete a private lending transaction and that’s something we are pretty good at.
But it starts with being able to identify situations that a private lender is going to be interested in financing and situations that are unlikely to attract very much if any interest.
Most people will view private mortgage lending as an action of last resort, and many times this can be the case when all other known possibilities have been extinguished.
But even as a lender of last resort, a private lender still has requirements that they are looking for, each somewhat different from the next.
Regardless of the private lender, however, is the objective to minimize risk and produce a profit from their lending efforts.
If a mortgage lender of any type cannot see a clear path to meeting these objectives, then its not likely you’re going to secure the mortgage that you seek.
It all starts with realistic expectations and moves forward from there.
Remember that the key tenants of private mortgage lending in general terms are the value of the security being offered, its marketability, and the available cash flow to service the debt and retire it at the end of the mortgage term.
If you have some combination of these factors that would support a lending decision in your favor, then there is likely a private mortgage solution out there for you.
If you are looking for a private lender to take on 100% of the risk without a high probability of a return, then you’re likely going to be looking for a long time.
Remembering that a fool and his money are soon parted, any private lender that takes on unrealistic deals will soon be out of business and not available to you or anyone else.
To find out what you’re private mortgage options are, please give us a call and book a time to speak to a member of our team and we’ll go over your situation with you.