8 Advantages of Choosing a Private Lender

Advantages of Choosing a Private Lender

If you are in Sydney or elsewhere in Australia and are looking to purchase a property but don’t yet have the funds available, a private lender is your best option.

There are many reasons why you might want to buy a property. Perhaps it’s a commercial property or a new investment opportunity that’s too good to pass?

If you need funds and access to cash quickly, whether for property settlement or just the deposit, and the more traditional banking options are not for you, then a private lender is where most people turn. You don’t have to be a big property developer to use a private lender. Many individuals with smaller property portfolios use private lenders regularly to tide them over until they can secure a long term loan.

But, before you decide to go down the path of using a private lender and snap up your next property, you might like to learn more about private lenders and see why they make such an excellent financing alternative to big, traditional banks.

Also read: Developers look to non-bank lenders

Private Lenders require less Paperwork

If you have ever tried to borrow money from a bank before, you will know that the paperwork can be a handful. Many borrowers get refused from banks simply because they have not met the textbook-sized paperwork requirements. It’s a massive hurdle for many prospective borrowers when they cannot gain access to cash to settle on a property. On the other hand, private lenders have far fewer requirements than traditional lenders.

The beauty of using a private lender to buy a property is that you generally only need two things – sufficient equity in another property or asset as collateral and an exit strategy. Known as property-backed loans, real estate forms the cornerstone of the private lending industry and makes the whole borrowing process so much simpler.

With fewer requirements from private lenders, you’ll be well on your way to getting that loan a whole lot quicker. In many cases, like with us at Sparrow Loans, you can expect loan approval within two business days.

Private loans give your more control.

The loan term depends entirely on you when working with a private lender. You might want the loan for a month or perhaps a year or two; it’s up to you. With a bank, you will be constrained by their lending criteria which takes away a lot of control and flexibility. However, you can negotiate terms and loan periods with a private lender with every decision you make. The lender can determine the interest rates, and you as a borrower are free to negotiate better terms.

All you need is real estate.

Having real estate as collateral is powerful. As a borrower, if you have an asset such as a home or commercial property, you should be able to borrow against it with private lender. Depending on the licencing of the lender, you may not be able to borrow against your personal home though. Having this type of certainty for your property portfolio or development sites (where you don’t have to deal or talk to the banks) makes your business decisions faster, easier and you can do them with confidence, knowing that you have access to a pool of funds whenever you need them.

Establish a new business buddy

If you decide to take a loan from a private lender, there is the possibility of building a long term relationship with a lender which can result in some special considerations for future transactions. Having a solid relationship with a private lender will establish a certain level of trust so long as you make your required monthly repayments. So, you are improving your credit history and relationship with a private lender, allowing you access to more cash or better terms in the future. Furthermore, for property developers always on the lookout for the next deal, this represents a fantastic opportunity to align themselves with a private lender who’s also eager for business.

Fast Loan Approval and Funding

As long as you have an asset to use as collateral, you can get loan approval and access to your funds much faster. With Sparrow Loans, approval can take only 2 business days, and you can have the money in your bank account within a couple of weeks! All you have to do is have all the correct paperwork at the time of application, such as title deeds of the asset, proof of equity in the property and an exit strategy in place. If you have ever dealt with a bank in the past, you’ll know how long it can take to provide you with approval for a loan.

When Banks Say No

Private lenders are eager to finance projects when other financial institutions and banks do not want to touch them. For example, you may want access to funds quickly to deposit a property purchase or perhaps a short term business loan for tax debt or business consolidation debt loan. Of course, many banks will not come to the party, but there will be a private lender always available with an open cheque book. It’s as simple as that! As long as you have an asset to use as collateral, a private lender will be prepared to do business with you.

Uncomplicated Loan Process

Fewer requirements mean a more straightforward long application process. You’ve got better things to do than deal with excessive paperwork and stuffy banking employees who relish paperwork and bureaucracy. When you use a private lender, the loan process is handled by a person who wants your business. They aim to make the whole lending and application process as seamless and streamlined as possible. Delays missed phone calls, phone tags, endless zoom chats are a thing of the past when you use a private lender.

Private Lenders To The Rescue

If you are a real estate investor or looking to access extra cash for your business, a private lender is a fantastic alternative. But like with anything new, you have to experience this to see why they make such a viable option.

You can also simplify the lending process by working with Sparrow Loans. Our private lending team is at your service with flexible lending rates and personalised experience to real estate investors and business owners looking for dependable and stable loans.

About the author

Ulrika Lobo

Ulrika Lobo is the lending specialist at Sparrow Loans and has over ten years of experience in the commercial business loan space. Ulrika co-founded Sparrow Loans to provide Australian SMEs with a faster and easier way to access finance. Ulrika is responsible for managing the lending process from underwriting to execution and settlement and post-settlement support.