For homeowners, the process can feel opaque.
For investors, it can seem mysterious.
In reality, private mortgage funding is one of the most structured, document-heavy, and risk-managed processes in lending — just very different from a bank.
Here’s what really happens from approval to funding.
Step 1: Property-First Underwriting (Not Credit-First)
Unlike banks, private lenders start with the asset, not the borrower’s score.
Behind the scenes, the lender reviews:
Property type and marketability
Current value and comparables
Existing mortgages and liens
Total loan-to-value (LTV)
Exit strategy (sale, refinance, renewal)
Credit is reviewed — but it’s contextual, not binary.
This is why private approvals can move quickly without cutting corners.
Step 2: Independent Appraisal or Valuation Review
Before funds are ever committed, the property value is validated.
Depending on the file, this may include:
Full third-party appraisal
Desktop valuation with market checks
Broker price opinions (BPOs)
Internal comparables and resale analysis
The goal isn’t optimism — it’s liquidity.
Private lenders ask: “If we had to sell this property, could we?”
Step 3: Mortgage Structure Is Engineered
Private mortgages are custom-built, not templated.
Behind the scenes, the lender structures:
First or second mortgage position
Interest-only vs amortized payments
Term length (often 6–24 months)
Fees and interest reserves (if needed)
Clear exit timeline
Every term is designed around risk containment and flexibility, not maximizing volume.
Step 4: Legal Due Diligence Begins
Once terms are accepted, lawyers take over.
This includes:
Title search
Review of existing registrations
Verification of taxes and arrears
Confirmation of insurance
Preparation of mortgage documents
Nothing funds without clean legal sign-off.
Step 5: Investor Capital Is Matched
In many private mortgage structures, capital is allocated only after legal and underwriting approval.
Behind the scenes:
Investor funds are matched to the mortgage
Exposure limits and diversification rules are applied
Compliance checks are completed
This protects both the borrower and the capital behind the loan.
Step 6: Final Signing & Funding
Once documents are signed:
Lawyers exchange funds
Existing mortgages or debts are paid out
Net proceeds are released to the borrower
This entire process can take days, not weeks — because decisions were already made earlier.
What Makes This Different From a Bank?
Banks automate risk.
Private lenders manage it.
Banks rely on:
Algorithms
Rigid policies
Centralized approvals
Private lending relies on:
Human review
Asset strength
Real-world exit planning
That’s why private mortgages fund when banks stall.
Why Transparency Matters
When borrowers understand the process:
There’s less fear
Better planning
Fewer surprises
Stronger outcomes
Private lending isn’t a shortcut.
It’s a different system built for real-life situations.
Where Lendworth Fits In
At Lendworth, transparency is intentional.
We walk clients through:
How underwriting decisions are made
How risk is measured
How exits are planned
What happens at every stage of funding
No black boxes.
No last-minute surprises.
The Bottom Line
Private mortgages don’t fund “quickly” because corners are cut.
They fund quickly because:
Decisions are made upfront
Risk is clearly defined
Structures are intentional
Everyone knows the plan
If you’re considering private financing, understanding what happens behind the scenes is the first step toward using it confidently — not cautiously.
📞 Questions about how private funding really works?
Call 905-597-1225 or visit www.lendworth.ca
Your equity deserves more™