WHY CONSIDER PRIVATE LENDING?

Several Reasons To Use Private Mortgage Lenders

This is the first of a short series of updates concerning the validity of using private mortgage finance as opposed to what we refer to as tier 1 and/or tier 2 finance institutions....

Update 1

Private mortgage lending is often overlooked by borrowers – but there are real advantages in using them. Private mortgage lenders generally accept that there is a “back story” behind each application. A problem – not really, if the proposal is of sufficient quality and virtually all of the time available to a potential borrower has not been taken up chasing rainbows with tier 1 and 2 financial institutions. Though in many instances, private lending can provide an efficient means to move forward, time may still be needed as not all transactions suit all private lenders in terms of volume, location, pricing and information requirements etc. So we still need as much time as possible, within the framework of thinking outside the envelope to achieve a result.

What are tier 1 and tier 2 financial institutions? ... Banks or other general financial institutions. Private lenders are just that...private investors, often providing the flexibility that real estate investors need in structuring their loans.  Is there a pricing difference? Yes. Is that pricing difference worth it? Only the borrower, in conjunction with the broker can decide that, but it may often be a case of the borrower considering what they may make out of a deal, or save by going forward privately, rather than being pressured under existing tier 1 or 2 structures.

There are a number of key differences when you look at a private mortgage lender compared to a regular lender – some are positive and some negative, but you should consider them. Simply put, there are some instances where a regular mortgage lender just will not provide finance – but a private mortgage lender will, or where a regular lender has done so, but wants its money back “right now”, and simply won’t allow further time for an orderly discharge  process for whatever reason.