Shocked! Confused...I didn't think so, because most folks like yourself already realize that anybody can be a private lender. It's true; and you can even use your self directed RRSP as a mortgage lending fund.
As a mortgage broker I continuously interview many potential private lenders...some with experience and some are trying to start. I always complete a background check on them. Much like a mortgage applicant I need to know who's lending the money, not just who is borrowing it. Does the money come from traceable sources? Does the lender have any kind of public record? I need to know who I can stake my 30 year reputation on, because I will always be known by the deals I complete.
My favorite private lenders have a some of these unique qualities...They are not nervous, they are sworn to uphold the privacy act, they know what mortgage niche they like to lend in, they are there when I need them, they are fair (but not greedy), they use common sense and my customers always give positive feedback from the experience. Every private lender wants to know what the exit strategy is for their investment, it is critical to their decision.
As a mortgage broker I need to rely on a few different types of private lenders. Some specialize in the short term stuff (like bridge financing and interim/construction financing). Some are looking for long term boring stuff that that makes a better return than their current mutual or savings. Some are even asking for high risk, but their rates reflect the risk (be prepared if you need one of these loans). You often hear about "equity lenders". Equity lenders lend based on the value of your home. If there is enough equity then they will lend you the money. Be prepared to pay both a high fee and a high rate. Even if they offer a low rate for 6.85% at say 6 months to a year and they get a 6% lender's fee from you...do the math. That low rate just jumped to the mid teens, and the lender yielded what he wanted. Yes, I have private equity lenders in my lists too, but i make sure they are ethical and I also make sure the deal is a win-win for everybody. There must be a clear exit strategy.
If your mortgage broker specializes in private lending, like I do, they will have a complete mix of potential lenders they can call on. My only real challenge is that during the really cold snaps in Alberta, my private lending sources are all down south waiting out the sub zeroes. That being said, if you would like to have a coffee and talk about how you can be added to my list, just contact me at mike@RealMortgageSolutions.ca . I have a close circle of licensed leading mortgage professionals whom I consult with and when the right deal comes along, your RRSP can suddenly become your great performer.
