Using Hard Money Loans When Investing In Real Estate


Hard money (private) loans for real estate investment often result in quicker portfolios and greater wealth for investors. Investments can often provide a consistent flow of cash and long-term wealth for your family and yourself. Hard money is generally borrowed by an investor who’s looking to buy a renovated property and traditional mortgage lenders typically won’t fund it. It’s more or less a shorter term loan which is backed by the property itself rather than the borrower.

If you’re looking to purchase a house “as is” and renovate it yourself, traditional lenders will usually pass on them which means you’ll need to look elsewhere. You may be approved for a mortgage though if you have a good track record in the commercial real estate business. Other than that, one of the best options is a hard money lender. In general, the rates for hard money loans are higher than a traditional mortgage, but you may be able to negotiate terms with the lender. They’re usually short term and have built-in penalties if you need to extend the timeframe or if you pay it off early.

The terms and fees are typically based on the borrower’s track record and experience if applicable. Many lenders will fund just 65 per cent of the ARV (after repair value) and some lenders could ask for money in escrow until the house has been completed. The lender will want you to have a mortgage and may want to be named on your homeowner’s insurance policy. The loan is usually disbursed in several draws with each one coming after a portion of the work project has been completed.

Once you’ve acquired a loan from a hard money lender, you may find yourself doing regular business with them. Many borrowers end up being private or hard money lenders themselves after they fully understand how the process works. This helps other real estate investors complete deals and many neighbourhoods are revitalized due to the funding of numerous renovation projects. For more information on hard money loans, please contact our team of professional brokers at at your convenience. is a Toronto-based mortgage company, providing traditional and private mortgages for residential, commercial and investment properties in Ontario.

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