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Alternative or Private mortgages come with fees and costs, like lender fees, mortgage administration fees, mortgage broker fees, appraisal, and legal costs.

Lender fees are variable from lender to lender as well depend on lending terms. Lender fees are usually in the range of 1% – 3 % on the mortgage amount.

Mortgage administration fee also can vary from 2- 5% of the mortgage amount, whether is 1st to 2nd or 3rd mortgage, new purchase or refinance.

Mortgage broker fees vary from broker to broker and can be expressed in the dollar amount or in percentage (usually in the range 1-2%).

Appraisal Cost – As private lending is equity-based, the lender needs assurance that they are lending against a property that is worth enough to ensure they are financially protected. You’ll be required to pay for a property appraisal through an appraiser that is approved by the lender.  You are responsible to cover the cost at the time the appraisal is done but don’t pay for an appraisal until you have a lender lined up, who’s agreed to finance you.

The legal cost associated with the mortgage transaction – You, the borrower, is responsible for paying the legal fees for both yourself and for the lender.  Some lenders allow to use the same lawyer as the lender, so that reduces your legal fees somewhat, but you always have the option to use your own lawyer.  

It is recommended to you to always ask for cost and fees when exploring private lending options, so you know your options upfront.