Even though private lending is a fairly competitive market place, not all private lenders will price a particular deal the same way.
All things being equal, a competitive market will produce competitive or similar rates for a similar product or service. But that is not always the case with private money rates.
There can be a number of reasons for this. Let’s explore the more common ones.
First, in some locations, there will not be as much competition and private lenders can be in and out of the market at any point in time. So the lenders that do exist can adjust their rates according to supply and demand.
Second, and arguably the most common reason for rate disparity is that a healthy number of people seeking private mortgages are in a rush and many times have to take whatever they can find quickly to protect a deal or avoid some type of cost. This allows lenders to be able to price their money at different levels for basically the same level of risk.
Third, some lenders will be more comfortable with certain types of properties than other lenders will be, creating a different perception of risk and therefore different pricing of rates.
The keys to getting the best available rates for a given type of property is 1) leaving yourself enough time to go through the financing process, and 2) working with an experienced mortgage broker who can match your requirements up with suitable lender offerings.