Although there are some possible benefits to private mortgages, there are also potential risks with these mortgages. Some rest can be: Higher interest rate. Typically private mortgages come with higher interest rates as well as the lender fees. Shorter terms: As these mortgages are sometimes with one year terms, you may need to re-qualify at the end of the year or pay another lender fee. Less ability to pay the mortgage off faster: If you are borrowing the money for a one year term, for example, if you have the ability to pay it off sooner some lenders do not have the option. Or, they would charge a penalty to do so.