The fine print that can turn a 6% private loan into 14%
“But then if they don’t renew and it auto-renews, the rate goes up by 3.5%, there’s a 4% auto-renewal fee, and all of a sudden your 5.99% and 2% is now 14%, and they’re locked in. It’s closed for 6 months or for a year, and they’re handcuffed.”
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Why private mortgage costs don’t stop at the rate
Nick Christopoulos, chief executive of Hosper Mortgage, said brokers routinely compare private lenders on the wrong numbers.
“A lot of brokers think it’s just about interest rate and placement fee. And when you actually compare lenders, there’s a big disparity in the schedule of fees – the fees that they charge for administration, for discharge, for enforcement actions,” he said.
“On an annualized basis, these fees can be upwards of 3, 4, 5%.”
