Private Mortgage Lender
Private loans, also known as alternative loans, are a financing solution offered to borrowers for financing a real estate purchase or refinancing. These loans offer many advantages and are particularly suitable for those who have been turned down by banks due to poor credit or income that is difficult to verify, and for investors who want to invest in the short term.
Who are private lenders?
This lender may be an entity, a group of individuals, notaries, or companies specializing in private loans.
How does it work?
Private loans require equity in the property to secure the lender, excluding 100% financing. These loans are legal and notarized, and are registered in the Land Registry. Interest rates are higher than those offered by banks, reflecting the increased risk for the lender. With flexible terms, such as interest-only payments or a minimum term of 12 months, these loans offer speed and security.
The lender takes collateral on one of the borrower's assets, not necessarily the one involved in the loan. The loan is legal, notarized, and registered with the government (Land Registry).
Private lenders tailor their offers to the specific needs of borrowers. Some specialize in certain types of property, such as commercial or residential, while others focus on the purpose of the loan, whether it be debt consolidation or renovation. In addition, location plays a role: many favor high-value urban areas or regions they know personally. This flexibility ensures tailor-made solutions for each borrower.
Who is eligible for a private loan:
A poor credit history
It is not uncommon for individuals with less-than-stellar credit histories to find themselves in a financial bind. Banks and traditional financial institutions have strict lending criteria, and a poor credit history can often lead to rejection. This is where private loans come in. They offer a lifeline to those who struggle to obtain financing due to their history.
Self-employed workers & entrepreneurs
In some cases, even if a person has the ability to repay a loan, they may be denied due to so-called “unverifiable” income. This can apply to self-employed individuals, entrepreneurs, or other professions where income fluctuates. Private lenders, unlike banks, may be more flexible and not require the same proof of income.
People who want to improve their credit rating
Opting for a private loan can be a short-term solution to take some time to improve your credit rating and subsequently obtain a traditional loan to benefit from a better rate. Indeed, a better rating opens the door to a multitude of financing options, often at more advantageous interest rates.
Facebook
Instagram