GuidesPrivate loans
Private loan: points to check
Rate, fees, security, maturity and repayment before signing.
Opening or administration fees
Brokerage fees
The lender’s legal fees, charged to you
The rate and how it is calculated
The quoted rate is not the only cost. Ask for the effective annual rate, fees included.
The fees
- Opening or administration fees
- Brokerage fees
- The lender’s legal fees, charged to you
- Renewal fees if the loan is extended
The security
Lien position and any personal guarantee change the amount granted.
Maturity and repayment
- A six, twelve or twenty-four month term
- Prepayment penalty, often three months of interest
- How you intend to repay at maturity
Who is actually lending
Some private lenders are companies, others individuals.
Ask who holds the funds and who will sign the mortgage deed.
Processing time
A private loan closes in one to three weeks. That is its main advantage.
That speed does not excuse skipping a careful read of every clause.
What to have reviewed
Have your notary or lawyer read the offer before signing.
Signals that should alert you
- Fees demanded before any written offer
- A refusal to provide the full contract
- Pressure to sign the same day
- A lender unwilling to speak with your notary
A serious lender accepts all these checks without difficulty.
