If you are anything like me you are regularly finding new opportunities for real estate investment. These properties often seem to come up for me when I don’t have the cash or finance organized to take advantage of the opportunity. However since I started making use of good private mortgage lenders, the whole issue of financing my investment properties has become much easier.
Looking around for investment properties is more than just finding cheap houses for sale – it is about finding a property that delivers profit – no matter what the price. Sometimes finding the profit that a property can deliver is subjective – just ask any bank manager. Having a property that you know can turn a profit being rejected for a mortgage by a regular finance provider can be a little demoralizing – but it is not the end of the world.
Just because the regular lender declines your mortgage application does not mean that you will not be able to secure finance for the investment. A private mortgage lender has less limitations and more freedom than your bank manager – allowing them to take the income produced by the investment as the main deciding factor in determining the viability of the loan. This means that the deal you know makes financial sense but has been rejected by a traditional lender will likely be approved and financed by a private lender.
You must be careful of entering into a loan agreement – as with any contract. The terms of a private mortgage will be different to a traditional lender, so be aware. The primary difference will be the term of the loan as well as the interest rate you will pay – generally a few percentage points above prime. Private mortgage lenders give you great opportunities for securing finance for investment properties when you would otherwise not be able to secure it – overlook this opportunity at your peril.