What kind of returns do private mortgages produce? Is the interest rate fixed?
The typical interest rate for a direct private mortgage ranges from 10% – 16% depending upon the time frame, the purpose, the loan-to-value ratio, the exit strategy, the quality of the Borrower’s personal guarantee(s) and other factors. The interest rate can be either fixed or floating, depending upon the way the transaction has been structured. Typically the floating rate mortgages always set the initial interest rate as the “floor” so that it can go up if, for example, the Prime rate rises, but cannot go down if the Prime rate drops.
