Private Lender – When you need money during emergency circumstances, it’s not always possible to rely on credit cards, friends, or relatives. You need to look out for another feasible option to access instant cash either to deal with uncertain expenditures or to invest in something big. Whatever the case may be, the loan is an ideal monetary aid available for people. Be it like a personal loan, payday loan, or mortgage loan. It can be anything you apply to arrange much-needed funds at the right time.
Now, the question that most borrowers ask is whether to approach traditional banks or use a private lender. Well, it depends on the necessity of the money that you need. Some prefer to deal with traditional lenders with a view to obtaining at least the minimum possible funds. However, fast money arrangement is always possible with private lenders.
So, here we will be discussing, in what circumstances, you should apply for a loan with a private lender and in which situation you should avoid the same.
What is a Private Lender?
Private lenders are separate financial entities that receive funding from private investors and sometimes from banks. They offer a varied range of financial services to borrowers in the form of personal loans, payday loans, mortgage loans, and more. Such investors expect a decent return from the investment and generally charge a higher interest rate as compared to the traditional loan offers. However, they offer fast, reliable, and sure-shot monetary aid to people during emergency circumstances.
There are different reasons for borrowers to approach private lenders for a varied range of fiscal offers. Each loan type has different terms and advantages while getting from privately owned lenders that you will see later below.
Private Lending in Case of Mortgage
As the name implies, mortgage loans offered by private lenders are different from traditional borrowings in terms of interest rate and duration. They usually start from the duration of 6 months to 3 years based on the asset, the value of the property, or equity being put up as collateral.
People generally prefer private mortgage funding when they are not able to qualify in the conventional lending process. Also, private mortgage further helps several real-estate investors to get immediate funding for the loan or any property without facing the lengthy documentation process.
Value Prediction
One thing to understand the fact that private mortgage lending comes in secured nature. It represents the maximum 65% to 70% of the appraisal value of the producing property. In the case of non-income property, it values around 55%. Also, investors will find it flexible to pay interest rates anywhere between 12% to 14% on the first lies and after that 16% to 18% on the second lies.
Private Lending Mortgage Rates
|
Private Rate of Interest |
6% to 18% |
|
Down Payment |
20% to 50% |
|
Amortization |
1-35 years |
|
Payments |
Principle interest rate and interest only |
|
Additional Fees |
Appraisal, broker, lawyer, lender insurance |
| Qualification |
Cash, credit, property, income, exit strategy |
Source: https://www.richardsmortgagegroup.ca/private_mortgage_lending_alberta_bc_ontario
Ultimate Reasons to Consider Private Lender for Mortgage
There are several reasons stating the fact that a majority of borrowers prefer to use a private lending institution to avail the loan. And, they have no issue in paying a 14% to 18% rate of interest which is much higher as compared to the traditional loan offers.
Simple & Fast Application Process: In the case of conventional mortgage lending, if your personal information is not up-to-date, then it will negate or delay the process of loan approval. However, private lender’s only concern is the value of the property and whether it is able to generate sufficient means of income. This is the reason; it is simple and fast to obtain mortgage funds from privately owned lenders. The borrower’s personal financial situation does not affect the private lender’s decision.
Speedy Closure: When you approach a traditional lending institution, then you have to wait approximately for a period of 45 days to 90 days. During this period, conventional lenders examine your credit history, the value of the property, and even evaluate your current financial situation. Even after that, there is no such guarantee to obtain loan approval or not. While on the other side, a private institution’s only concern is your property appraisal value and closes the deal within an estimated period of 7 days to 10 days.
Flexible Money Resource: In many cases, mortgage borrowers cannot get final loan approval from traditional lenders due to manifold reasons. It could be having low credit ratings, too much debt over the head, and even the property value is not up to the mark. However, private lending institutions are only concerned about the fair market price of your property. In short, you have higher chances of getting the loan approval and flexible loan money here.
Express Payday Loans from Private Lending Institution
Private lending for payday loans also works fast for borrowers because of the following few reasons.
Quick Funds: A majority of private lenders work on the phenomenon of giving the loan amount within 24 hours of approval. Even some institutions offer the money on the very same day of making the online application. This is not something that you actually see with traditional lenders who generally take 6-7 days of time to examine the loan application. Even after that loan application could be rejected owing to different reasons.
Easy Access: There is no denying the fact that applying for payday loans via a private lending institution is a matter of few minutes only. Borrowers need to leave the comfort of their home and just apply by phone, email, filing an application on the website while accessing on the laptop or desktop. On top of that, if your credit score is in good condition, then it will much simple for you to obtain approval in few hours only. So, easy accessibility of the loan is another reason for relying on private lenders and uses their varied financial offers.
Fast Renewal: Renewal is fast and easy here. Just like traditional lending, there is no such need to once again showcase borrowing capacity, credit rating position, and do other formalities. In private lending, renewal is fast sometimes in a single day itself.
No Collateral: Payday loans do not entertain the requirement of collateral from a private lender’s side. So, you need not face the hassle of valuing your property or other personal assets.
Wrapping Up
Think of getting a personal loan, payday loans, or mortgage loan fast, and then private lending is the only way to face fewer hassles and get approval in no time. We are here to meet your emergency financial requirements with our incredible monetary offers meeting the personal requirements of all the people.
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