Demystifying Private Lending

Private lenders are often mislabelled, misunderstood and underused as a viable solution when looking to finance a project or to assist during a difficult financial situation.

The use of private lenders is becoming more and more vital due to the number of rule changes and difficulties that borrowers are experiencing through traditional banking channels.  Since the implementation of these rule changes, many homeowners who previously could have obtained financing through their bank, no longer fit the underwriting box.  A private lender will look at these situations on a case by case basis in order to determine how they can help.

There is a misconception that only those who are in financial difficulties would use a private a lender.  While this may be true in some cases, there are many credit worthy individuals who contract private loans to have quick access to funds when a property is in need of major renovations, an investment opportunity appears, or when outstanding income taxes need to be paid. 

A good private lender will customize a solution to ensure a custom-fit mortgage that will best suit each person’s unique needs.  There are three important points of a custom mortgage: creative structuring to work within the borrower’s cash flow; a customized length or term, and to a lesser degree, the possibility of multiple collaterals; and an appropriate exit strategy. 

A good private lender can prove to be a viable short term solution, where traditional banks are unwilling to help address the client’s unique financial needs.  These short term solutions should be structured so that everybody has an “exit strategy”, synonymously, a light at the end of the tunnel.

Do not hesitate to contact me for any questions related to your mortgage needs at (514) 295-5676 or by email at jverbejus@planipret.com