- Loan based on property value not on your income or property cashflow
- Refinance while avoiding large penalties from institutional lenders
- Turnaround time is usually faster than the banks
- Lenders assess risk exposure, exit plan, term, client situation, use of capital, and marketability
Private loans can be a great option for individuals who are unable to qualify for a traditional mortgage. This may be due to being self-employed, having challenged or no credit, or carrying a high debt servicing ratio. Private lending is more property focused rather than person focused, which allows individuals access to financing that is otherwise unattainable elsewhere. Simply put, it is primarily based on the equity of your property.
Some developers and business property owners also use equity based loans for renovation or development projects that will eventually have income or cash flow upon completion. The permanent financing can be arranged once the project/development is completed and this is the exit strategy for the private lender.