Questions, but not answers – Yet!
Little Rock Investments Pty Ltd ACN 119526573
"PRIVATE" MORTGAGE LENDING AGAINST REAL ESTATE
Genuine larger private lenders are scarce. Their resources are in considerable demand. Little Rock has access to available funds, experience, due diligence and packaging skills if you have suitable proposals
Genuine larger private lenders are scarce. Their resources are in considerable demand. Little Rock has access to available funds, experience, due diligence and packaging skills if you have suitable proposals
Registered Address - 31 Gollan Dve Tweed Heads West NSW 2485
Skype +617 31032449 Mobile+61 488 224416
Personal+617 55 642298 Fax +617 3036 6386
As a packager in the private mortgage finance industry, and dealing only through Brokers, I have a good many discussions about what is happening in the mortgage industry generally. There seems to be some common themes among Brokers dealing in residential investment properties. It is the tardiness of Tier 1 lenders, such as banks etc, and the bloody-mindedness of Tier 2 (non-bank) lenders – you know who they are.
Yesterday I had a conversation with a Broker who has left the residential investment environment because of delays in bank approvals. He simply lost too many deals as a result even when the bank ultimately did provide an approval.
An associated issue is the behaviour of Tier 2 finance institutions, on maturity of a residential investment loan. The problem seems to arises when a loan is due for repayment. I am lead to believe that the treatment of the borrower at that point can be horrendous – for instance, not only charging the default rate of interest, administration and other fees, but continuing to do so while periodically refinancing the deal and charging fees for the privilege, while awaiting “external” refinance.
I wonder how many Brokers have similar stories? I don’t have answers to these vexing questions, but I would be interested to discuss them to see if there is a way where Little Rock can help us both and the borrower to make these processes a smoother one? We only write private bridging loans of up to one year, and charge appropriate pricing according to the exigent circumstances and time-frame which may force a borrower to seek alternative shorter term finance e.g. left over development stock where sales have been adequate but the bank will not extend any longer. Our LVR gearing is usually cautious.
So, is there a place for private bridging as a short term solution to secure a desirable property within a reasonable time-frame (for instance, we don’t even require valuations), while the process continues in the background to ultimately provide finance at Tier 1 pricing?
I don’t know, but I would be interested to hear from anyone who has a suggestion, if indeed the problem as it has been described to me, does actually exist, and there is sufficient volume to make it worthwhile to pursue.
Steven Acworth
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