If you are an investor who likes to immediately purchase and repair an investment property that is in a bad condition, then a private money lender will be beneficial for you. Their fast funding time and quick pre-approval process are their major benefits. Of course, just like any other services, they have their cons as well. This includes short loan terms and higher interest rates.
Advantages of Private Money Loans
- Available Renovation Financing
Money lenders provide renovation financing. For instance, private money lenders issue loans to finance the purchase and rehabilitation of a real estate property as a single loan. On the other hand, conventional loans, before they finance you, they will require the property to be in great condition.
- Quick Funding Process/Approval
A private money loan can be issued and approved immediately. It usually takes several days. For instance, a hard money loan will usually take around 5 minutes for the process of prequalification and 1 up to 2 weeks to obtain the funding.
- Low Credit Qualifications
usually, the minimum credit qualification for a private money lender runs around 550 personal credit score. You can, however, do research on the top 10 personal loan money lender in Singapore.
Disadvantages of Private Money Loans
- Shorter Payback Periods
oftentimes, when compared to conventional loans, private money lenders need shorter payback periods. The terms of a hard money loan usually run around 1 up to 3 years. However, it isn’t uncommon to see a hard money loan with a 4 up to 7 months payback period.
- Higher costs
Usually, the interest rates of a private money lender runs around 7% up to 13% or more. On the other hand, conventional mortgages have 3% up to 5% interest rates. In addition to that, private money lenders often have lender fees that run around 9 up to 10%