In most situations people and companies tend to use traditional lending institutions to finance their purchases, projects, investments, etc. There is an alternative to borrowing money from these traditional lenders. Private financing is another source from which borrowers may choose to fill their financial requirements. The opportunity for you, as an investor is to become the lender who provides the private financing.
Why do Borrowers choose Private Financing?
Although there are a number of reasons why Borrowers choose private financing as their source of financing, some of the more common reasons are listed below.
i. Short-term or bridge financing
ii. To avoid the strict qualification criteria imposed by traditional banking institutions
iii. Speed of transaction
a. Private financing transactions typically can be closed between 4 to 10 days, while bank mortgages can take up to 30 days to close.
iv. Cash now vs. Cash later
a. Borrowers may require more capital upfront, and do not want to wait for traditional banking institutions to decide when they get their financing and in what portions
v. Unique financing requirements
a. Because of the strict rules applied by traditional lending institutions, there are some projects or investments that the banks deem to be too risky. Borrowers are willing to pay more for private financing in order to get the job started, and completed.
vi. To avoid the stringent guidelines
a. Borrowers may be self-employed, and on paper do not qualify for financing from traditional banks, while they do have the cash flow to make adequate payments towards their debts.
Why invest in Private Mortgages?
You may have investments in other areas, and wish to diversify your portfolio. Private mortgages are a good way to diversify, while choosing the risk levels you are most comfortable with. You are in control of which deals you wish to invest in, which gives you the flexibility to choose from various deals, length of the term, and the type of investment you are investing in. The best thing about private mortgages; are the high returns. Although there is risk involved, the ratio of risk vs. return are quite favourable to many investors, which makes private mortgages an attractive investment opportunity.
For more information
Call us today, and ask about the security involved in our private mortgage deals, and how we can help you manage the risk. Please contact a representative to learn more about private mortgages, and how you can diversify your investment portfolio.