As part of its real estate practice, Open Door Law has represented both private lenders and borrowers in private lending transactions. “Private Lending” generally refers to any form of borrowing by a borrower from a lender that is not traditional, such as a bank or credit union. Private lenders are usually capital corporations who seek a yield on their loaned capital. Private lenders typically are not so worried about credit score but rather their ability to realize on the borrower’s security. Loans are typically shorter-term in nature and can be anywhere from six months and up. The most common term we see is one year. Private loans are often interest only or no interest while advanced as interest is collected as a lump sum when due.

Private mortgages serve an important part of the real estate market by granting loans to parties that otherwise would not be able to meet their obligations and be forced out the real estate market as conventional lenders have far more restrictive requirements. To compensate private lenders for the extra risk, private mortgages are typically characterized by higher interest rates than those offered by conventional lenders. While rates differ between various private lenders, it is not uncommon to see rates at double or triple what a conventional bank offers if the borrower could qualify for a loan. 



If you are a private lender and need to work with experienced counsel to help generate a package of documents that secure your interest in a borrower’s property, feel free to connect with our real estate group. Solicitor fees are typically settled by the borrower so there is no cost to the lender. If you are a borrower and need help with reviewing the terms of a private loan being offered, we are equally able to assist you before you proceed with the lending transaction to help ensure that you understand all aspects and consider your options carefully.