A private mortgage from a non-bank private lender is generally based on the asset you pledge as collateral. Most private lending companies or individuals want you to have at least 40% equity in the property (a 60% loan to value). The exact amount of equity varies by private lender and their investors, but it will likely be based on the amount and type of collateral as well as your personal financial situation.
When you make the decision to take out a home equity loan, there are several things that you should look for. One thing is that you want to make sure you get the lowest possible interest rate on that loan, which will not only save you lots of money, but will also help get you much lower monthly payment amounts, which will be much easier on your budget. Another thing you should look at when comparing home equity loans of different lenders is the fees that come with them. Many loans come with fees that can be added into the total loan amount, or that you will be required to pay at the time of closing.
California hard money lenders are willing to provide investors up to 70% of the after repair value of the rundown property. In most cases, especially when you are able to buy a house at a deeply discounted price, 70% of the ARV is often enough for all of the investor's expenses. That means you might be able to buy an old house and turn it into a new home without using your personal money. All you'll need is the financing provided by the lender.
You should also know what lenders will be looking for in determining your worthiness for the loan, and the factors that may impact your loan terms. Lenders typically look at your overall credit rating, your monthly net wages, other monthly obligations, and other factors that vary from lender to lender.
If you do not have equity in the project you are working on, many private lending groups will accept other collateral as a guarantee on the loan. For example, you may own other real estate with substantial equity, or other assets that would satisfy the private investor. Many private lenders are lending their private investors' savings. So think in terms of what you would want to satisfy you that the risk on a project is nominal.