July 29, 2021

What is the advantage of using a private lender versus a traditional bank?

You may have experienced that banks and traditional lenders are not fast to lend funds or their loan parameters are too rigid and restrictive to certain types of borrowers or market sectors.

Banks have significantly tightened their lending standards, becoming excessively risk averse and taking a one size fits all approach to a mortgage application. You may also find, thanks to the Covid-19 pandemic, banks have a restriction on their lending quotas – there simply isn’t enough money to lend due to many mortgage holders needing to take a “holiday” on their repayments.

Just because a traditional lender has deemed you as not suitable or your project is on the more unusual side, does not mean that your project isn’t a solid, creditworthy deal.

Private lenders will consider funding projects that the banks won’t. A reputable private lender, like Credit Connect Group, will take risks with a common sense point of view.

What are the benefits for the borrower?

1. Greater Flexibility: Banks must adhere to strict regulations set by the government, where private lenders, who also follow regulatory guidelines, can be more flexible, taking a common sense approach to who they lend to and what loans they may decide to offer. Credit Connect Group is licensed by ASIC to provide credit to finance short-term home loans, using their own funds or fund

s raised from a strong established network of private investors.

2. Quicker Turnarounds: Banks can take 6 – 8 weeks to approve and fund your project. Private lenders can do this in as little as 2 -3 weeks. If you have an urgent business opportunity that requires funding, you need to act fast. Private lenders can access the funds needed for your opportunity much faster than traditional lenders.

3. Tailored lending: Banks approve loans based on criteria that is likely to be managed by a program or computer – oftentimes making it difficult for a self employed, non-resident or start up business to obtain approval. Private lenders think outside of the box and individually assess loan applications focussing on the quality of the real estate security. Credit Connect Group offers personalised interest only rates, based on the identified merits and risk of your loan.

4. Short Term Loans: You need capital to complete your development project; private lending can provide short term loans so you can keep your project moving forward. The requirements with a private lender are not as rigid as conservative banks; generally willing to consider your circumstances and the higher loan to value ratio. Traditional banks require hard evidence of income and will stay within strict lending guidelines.

Credit Connect specialise in responsible lending, taking a reasonable approach to lending that is acceptable to both borrower and lender; only offering a loan to those with a good risk profile.
Are you looking to finance your next property project? Give Credit Connect Group an obligation free call today and allow our specialists to guide you through the process.