Are you a real estate investor or an individual looking for private funding in BC, Canada? Is the bank constantly turning your loan requests down because of poor credit scores and income? Do you want to get an alternative mortgage solution? What factors affect loan eligibility to private lenders?
Private mortgage lenders.
When compared to a bank, getting real estate loans from private lenders is quicker. The lender approves the 1st, 2nd, or 3rd mortgages in as little as 24 hours. These loans include:
- Home renovations.
- Education.
- Outstanding taxes.
- Business capital.
- Self-employed income.
- Vacation loans.
- Debt consolidation.
When calculating the amount of loan, the income and credit score of the borrower does not matter. Private mortgage lenders can help you to process your loan using your phone or contact form. The terms and conditions of private lenders vary greatly.
Factors that determine loan eligibility to private lenders.
- a) Credit score.
You will easily get approved for a loan if your credit score is high. The higher your score the better the interest rates.Small business owners prefer to ask for private loans because of the speed and ease of loan approval.To build a good credit history, you need to:
- Pay your loans on time,
- Ensure your transactions are transparent
- Ensure every purchase is invoiced.
- b) Property profitability.
The private lenders ensure the prospective property is a profitable asset. The lenders will be reluctant to fund your property if it has no potential for profit. Provide your lenders with the estimated value of homes in your area to show your property is highly profitable.
- c) Income
The lenders will look at your income and determine if you qualify for the loan. Your income will show the prospective lender if you are capable of repaying the loan. The lower the debt to income ratio, the higher the chances of qualifying for the loan.
- d) Level of commitment.
To show your lenders that you are serious about the investment, offer to put down a larger down payment. It shows them that you are just as invested and willing to take the risk as they are.
- e) Level of risk.
Your investment experience and real estate history are what the private lenders consider. Putting down a larger down payment or showing a detailed plan for your property is an added advantage if you are new to real estate investment. Lenders will see your commitment if you have done your research.
Documents needed by private mortgage lenders.
- Credit score.
- Appraisal.
- Proof of property tax payment.
- Mortgage applications.
- Mortgage statements.
Ways of using private lender loans.
- Purchasing new property.
- Refinancing new property.
Conclusion.
Investors prefer to take loans from private lenders compared to conventional financial institutions. It is because private lenders have less restriction, loan approval is quick, and more liquidity. Certain factors affect the borrower’s loan eligibility. They include credit score, property profitability, level of risks, level of commitment, and income. Some of the documents needed by private lenders include credit score, mortgage applications, appraisal, mortgage statements, and proof of property tax payment.
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