Why are private mortgage interest rates higher?

Private mortgage rates are higher because the lender is taking more risk and the financing is often urgent, short-term, and based on equity. Rates can vary widely depending on the file, property, and overall risk.

What fees should I expect with a private mortgage?

Private mortgages can include lender fees, broker fees, legal fees for both sides, appraisal fees, discharge fees, and renewal or extension fees. Some costs may be added to the mortgage balance, reducing equity.

What happens if I miss a payment on a private mortgage?

Missing a payment can trigger default interest, additional enforcement costs, demand letters, and a fast path toward legal enforcement. Timelines depend on the mortgage terms and legal process.

Can I lose my home with a private mortgage?

Yes. A private mortgage is secured against your property. If you default and cannot resolve it, the lender may enforce its security and the property may be sold, which can significantly reduce or eliminate your equity.

When does a private mortgage make sense?

A private mortgage can make sense when you have a clear exit strategy (sale, refinance, or another realistic plan), and the loan solves a temporary problem without creating a larger long-term issue.

What questions should I ask before signing a private mortgage?

Ask for your total cost including fees, what happens after one missed payment, your realistic exit strategy, how much equity will remain at renewal, and how quickly enforcement can begin under the terms.

Why are private mortgage interest rates higher?

Private mortgage rates are higher because the lender is taking more risk and the financing is often urgent, short-term, and based on equity. Rates can vary widely depending on the file, property, and overall risk.

What fees should I expect with a private mortgage?

Private mortgages can include lender fees, broker fees, legal fees for both sides, appraisal fees, discharge fees, and renewal or extension fees. Some costs may be added to the mortgage balance, reducing equity.

What happens if I miss a payment on a private mortgage?

Missing a payment can trigger default interest, additional enforcement costs, demand letters, and a fast path toward legal enforcement. Timelines depend on the mortgage terms and legal process.

Can I lose my home with a private mortgage?

Yes. A private mortgage is secured against your property. If you default and cannot resolve it, the lender may enforce its security and the property may be sold, which can significantly reduce or eliminate your equity.

When does a private mortgage make sense?

A private mortgage can make sense when you have a clear exit strategy (sale, refinance, or another realistic plan), and the loan solves a temporary problem without creating a larger long-term issue.

What questions should I ask before signing a private mortgage?

Ask for your total cost including fees, what happens after one missed payment, your realistic exit strategy, how much equity will remain at renewal, and how quickly enforcement can begin under the terms.

Borrower Risks

Private mortgages can be powerful financial tools — but they are not risk-free. This page exists for one reason: to give borrowers the straight goods about private lending, including high interest rates, fees, default penalties, and the real risk of losing your home or property if things go wrong.

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What Is a Private Mortgage — Really?

If a bank has declined you and a private mortgage is your next option, read this carefully before proceeding.

A private mortgage is short-term, asset-based financing funded by private investors rather than banks.

Approval is based primarily on property equity, not credit score or income stability.

That flexibility comes at a cost.

Private mortgages are typically used for:

Bank declines or urgent funding
Debt consolidation under time pressure
Bridging a sale or refinance
Tax arrears, legal issues, or power of sale prevention

They are meant to be temporary, not long-term debt.

High Interest Rates: What Borrowers Must Understand

Private mortgage interest rates are significantly higher than bank rates.

Typical ranges:

8% – 15%+ interest
Often interest-only payments
Short terms (6–24 months)

Why so high?

Higher risk to the lender
Limited borrower options
Time-sensitive situations
Equity-based underwriting

If you cannot comfortably service the interest, the risk of default increases rapidly.

Fees Add Up — Faster Than You Think

Private mortgages almost always include upfront and ongoing fees, such as:

Lender fees (1%–4%)
Broker fees
Legal fees (borrower + lender)
Appraisal and discharge fees
Renewal or extension fees

These costs are often capitalized into the mortgage, increasing your balance and reducing equity.

👉 A private mortgage that “solves today’s problem” can create a larger one later if not managed properly.

Default Penalties Are Severe

Missing payments on a private mortgage is not like missing a credit card payment.

Common consequences include:

Default interest rates (often 18%–25%+)
Legal enforcement costs added to your balance
Demand letters and notices of sale
Rapid escalation to Power of Sale

Private lenders act faster because:

Loans are short-term
Capital must be protected
Investors expect enforcement if terms are breached

You Can Lose Your Home or Property

This is the risk most borrowers underestimate.

If you default and cannot resolve the issue:

Your property can be sold without your consent
Equity can be eroded by interest, fees, and legal costs
You may walk away with far less than expected — or nothing

Private mortgages are secured by your property.

Your home is the collateral.

When Private Mortgages Make Sense

Private mortgages are not bad products — when used correctly.

They can be appropriate if:

You have a clear exit strategy
A refinance or sale is realistically achievable
The loan solves a temporary problem
You understand the full cost and timeline

They are dangerous when:

Used as long-term debt
Taken without an exit plan
Payments are not sustainable
Borrowers ignore worst-case scenarios

Questions Every Borrower Should Ask Before Proceeding

Before signing anything, ask:

What is my total cost, including all fees?
What happens if I miss one payment?
What is my realistic exit strategy?
How much equity will remain at renewal?
How quickly can enforcement begin?

If you don’t like the answers — pause.

Our Philosophy: Transparency Over Sales

We believe borrowers deserve honest information, not pressure or false reassurance.

A private mortgage should:

Buy you time
Protect your equity
Lead to a stronger financial position

If it doesn’t do those things, it may not be the right solution — and we will tell you that.

Speak to a Professional Before You Commit

If you are considering a private mortgage, get a clear, written breakdown of:

Interest
Fees
Risks
Enforcement timelines
Exit options

Understanding the risks upfront can save your property later.

Your equity deserves clarity — not surprises.

This page is for educational purposes only and does not constitute legal or financial advice. Always consult qualified professionals before entering into any mortgage agreement.