Funds or capital is required by people for various purposes. Some need money to make more money, and others need it to spend it. There are many reasons for which we may require a loan. A startup, a business investment or an occasion of celebration all require funds and for those who do not have them, they look to borrow it from banks and financial institutions or a private lender. One of the common grounds on which the borrowers take a loan is the mortgage. Though both Private and commercial lenders give you the chance of taking a loan on the basis of the property that you possess. Taking a loan from the Private Mortgage lenders has its own benefits.
1. Personal Relations
A bank is in relation with no one and would treat your case same as that of other lenders. Whereas, in the private route of lending, there are chances of getting special treatment from the lender if you have healthy relations. If so, you might be able to ditch the queues and save a lot of your valuable time that the application process of commercial lending may consume.
Paperwork is another trouble that the commercial sources of lending would put you in.Banks and financial institutions have guidelines that they have to follow for any borrower to make sure that the capital that they will be lending will return and for this they require perfect documentation. This may be taxing on the borrower, as the commercial lending requires a long list of documents like the property papers, credit scores, previous loan records, criminal records and to name a few.
Private mortgage lenders have a fixed rituals for verification. They do not prefer to go into the details of the borrower, and the lending procedure majorly relies on the trust factor. However, banks and other financial institutions do not work on the basis of trust and relationships. They verify each and every document, analyzing the background of the borrower and evaluate the property before lending even the smallest amount of loan.
4. Time Saver
You may have to go through lengthy procedures to get approval. This may affect your work and may lead to time wastage. Application filing, documentation and verification can take up to three to four months to get approval. There is also a possibility that the application gets rejected at the final stage of the procedure and lead to frustration.
It may be hard for you to negotiate with banks, as they have fixed norms that they will not break in any situation. This may cost you your power to ask for concessions. Also, the overall cost may rise due to the cost involved in paperwork and verification process. In the case of Private Mortgage lenders, you have the advantage of negotiating the interest rates by using your relations or negotiation skills.
Private Mortgage lenders are no doubt a quick and easy method to get a loan, keeping your property as a collateral. However, the advice of an industry expert is recommended for all the borrowers.