What is Private Mortgage Lending?

Private mortgage lending, also known as private lending, is a type of real estate financing that involves borrowing money from an individual or group of individuals rather than a traditional lender such as a bank or credit union. Private mortgage lending is often used by real estate investors, homebuyers who cannot obtain a loan from a traditional lender, or homeowners who need to access their equity.

Private mortgage lenders may include individuals, companies, or funds who have the capital to lend and are willing to take on the risks associated with lending. The terms of a private mortgage loan, including interest rates, repayment schedules, and collateral requirements, are negotiated directly between the borrower and the lender.

Private mortgage lending can offer more flexibility and faster processing times than traditional lending, but it often comes with higher interest rates and fees due to the increased risk for the lender. Borrowers should carefully consider the terms and risks associated with private mortgage lending before deciding if it is the right option for their financing needs.