Private Lenders

Tracy Head • January 24, 2025

The easy fix isn’t always the right fix.

I’ve been wondering how long it would take to see the fallout as clients who have been paying really low interest rates come up for renewal. 


We have all experienced a steep increase in the cost of living. Even though rates now are sitting where most clients qualified with the stress test when they originally got their mortgages, for many people life has happened in the meantime.


What do I mean by that?


Often clients are having to push right to the top of what they qualify for just to get into the housing market. As we are going through the mortgage approval process we talk about keeping big consumer purchases (financing a car or furniture as an example) to a minimum as additional loan payments reduce borrowing power.


Once clients are into a home life does indeed happen. The older car dies and a new car is necessary. Little ones come along and that can affect family income and add a daycare bill to the bottom line. Property taxes increase. Grocery prices skyrocket. You know the list.


Balances start creeping up on credit cards or lines of credit. 


There are lots of different mortgage products to help with consolidation of debt. Lately the challenge has been that even if clients have significant equity in their homes with the increased interest rates they may not qualify with traditional lenders.


Alternative lenders and private lenders come into play as options in this case. I’ll leave the alternative lenders to another day because I have a cautionary tale about private lenders.


Not all private lenders are created equal. I have several that I work with when my clients need a solution in the private world.

There is a time and a place where a private mortgage is the ideal fit. As long as you have an exit strategy (a plan as to how it will be paid out in a relatively short time frame ie: one year) this can be a great option for clients.


Then there is the private lender that hurts my heart.


Heavy catchy marketing bombards us from multiple venues. Their jingle is running through my head as I write this. For them the bottom line is that if you have adequate equity in your home you are approved.


Cool. That fixes the immediate problem. However, more times than I like to think about, this lender creates far bigger problems for people.


Despite the fact that you have equity in your home you still have to make the payments on these private mortgages. Interest rates are usually around the 14% mark so payments are high and you are not making any headway with paying down the mortgage.

If there is no significant increase in your income you struggle and find yourself in a financial bind again. They set up another mortgage with an even higher rate.


When you sign on for a private mortgage your are responsible for covering your legal fees, the lender’s legal fees, and there is also a lender fee that is included. Even a small private mortgage can end up costing almost $10,000 to put in place.


If you couldn’t cover expenses with your first mortgage (at reasonable rates) guess what happens when you start adding in more and bigger payments on top of your normal expenses?


For most people the only out at this point is selling their home.


That is a very hard conversation for me to have with clients, especially when they’ve been in their home for many years.


If you are finding that there is more month than money, sitting down and reviewing your expenses is the first step to take. Are there any areas that you are able to cut back? Do you have any options for increasing your income?



If the answer is no, talking to a mortgage professional sooner rather than later may help identify some options before you end up in a never-ending cycle of sleepless nights and missed payments.

Tracy Head

Mortgage Broker

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Challenges

By Tracy Head • November 29, 2025
The topics I’ve written about over the years are almost always a reflection of a common theme I’ve seen or challenge I’ve dealt with since the last column I wrote. This one is no different.  The last few months, and particularly the last few weeks, have been among the most challenging in my mortgage career. I say challenging but that might also mean stressful. When working with clients and finding the right fit for their mortgage I look at many different factors. Rate is obviously one of the most important considerations. I also try to get a solid understanding of my clients’ short and longer term goals. For instance if the clients are looking to upsize from a home in the city to a rural property with acreage I will look at chartered banks or credit unions instead of a monoline lender. If the clients are purchasing a lease-hold property there are only a few lenders that will provide financing so that narrows the field. If the clients want direct access to manage their mortgage themselves I will place them with one of my favorite lenders that has an amazing client portal. Sometimes despite the client and the broker doing everything possible to ensure a smooth mortgage process things go sideways. Due to incredibly high volumes over the last few months I’ve seen refinance at renewal mortgages delayed by days or weeks. The stress for everyone involved is overwhelming. The most valuable lesson I’ve learned as a mortgage broker came from a wise more-seasoned broker about ten years ago. She said to me “when things are going sideways on a file, don’t get caught up thinking about what’s going wrong – think about what you need to do to fix it.” I have been hearing these words on repeat the last two weeks, and I think this is helping to keep me (and my clients) on track. If things do appear to be going sideways for you, I encourage you to connect with your mortgage person for regular updates.

Changes Affecting Financing

By Tracy Head • November 14, 2025
I consider myself a lifelong learner, which is part of the reason I love my work. Every day there is something new and exciting to learn, or in some cases re-learn. When I first came back to the mortgage world a more seasoned broker gave me a copy of a handout she used with clients. It talked about the ten most important things NOT to do between removing your financing subject and finalizing the purchase of your home. At the time I remember thinking that the handout sounded patronizing and I assumed clients just understood they shouldn’t do any of the ten things. You know what they say about assuming things. Once or twice my clients have made decisions that have almost jeopardized their financing. The reason this came up for me right now is that I am working my way through a training course which is geared towards helping me re-design my team and my workflow, with the ultimate goal of providing even better support to my clients. One of the changes I am going to implement is adding a list very similar to the original ten things not to do list to my signing packages so that we are all on the same page and avoid any potential challenges down the road. What are the ten things? I won’t go over all of them, but here are a few of the things that have surfaced recently: If you change the closing date on your purchase or if you receive the Notice of Completion on a newly built home, advise your mortgage person right away. Never assume your realtor will do this for you. Do not go out and finance anything without checking with your mortgage person. If you are pushing the upper limit of your buying power even a small loan for furniture might put your financing at risk. Many lenders pull your credit again shortly before your mortgage finalizes. Along the same lines, make sure all of your payments are made on time. Do not co-sign a loan for anyone. Do not quit your job or change employers without talking to your mortgage person ahead of time. Do not spend any of the money you have tucked away for your down payment. If you have money sitting in higher-risk investment better to move them to something more stable in case of market fluctuations. Most people think that once they get the ok to remove their financing subject that their mortgage is a done deal. The small print on every mortgage commitment includes a clause that says something along the lines of “Your financing is based on your current situation. Material changes to your situation prior to the funding of your mortgage may affect your approval.” I’m currently working with a young lady that decided to purchase a boat between the time we had our pre-approval conversation and the day she wrote her offer to purchase. She had decided not to buy a home then found her dream property. We’ve had to look at a few options as the boat payment threw her ratios out of line. She is fortunate that her parents are very supportive and are going to gift her the money to pay off the boat loan, but if she didn’t have that back up plan the new loan would have reduced her borrowing power by over $100,000. The reason I added the comment “without checking with your mortgage person” in the bullets above is that every client’s situation is unique and some of those changes might be just fine. Some might not, and the last thing you want to do is find yourself scrambling to figure out a Plan B shortly before closing.  Best to have the conversation and be certain.