Private mortgage funds typically pay investors largely based on the terms of the loans in their portfolios, specifically from the interest rate, and some funds might consider some other fees like origination, extension, late payments, etc. The rates paid by the borrowers are determined by some of the following factors:






	
Term or duration of the loan


	
Collateral Type


	
Asset Class


	
Loan-to-Value (LTV)


	
Loan-to-Cost (LTC)


	
Repayment strategy


	
Borrower’s net worth


	
Borrower’s Credit Score


	
Capital in the deal


	
Experience level of the borrower


	
Quality of the tenant(s) if a commercial leasing will be involved






Typically, the borrower's rates from a private mortgage fund are fixed for the duration of the loan’s term and most of the time are interest only. 




Investors who participate in a professionally managed private mortgage fund can expect to earn from high single-digit to low double-digit rate of return.




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