Private Mortgage or solicitor loans are popular in Australia for more than 100 years. These types of loans were started by solicitors to put lenders and borrowers together – arranging the funds by providing residential property as security to the lender. The Private Mortgages market has been experiencing a great transformation, but the common step of borrowing funds directly from the investor than a bank is still the same. These businesses are well-renowned as Mortgage Funds.
They can usually provide loan up to 60-70 % of the property’s value on a first mortgage premise. They will also consider specific securities at lower LVRs. The best part about them is that they require less information as compared to other loan types and can provide quick decisions and faster settlements. If you want to raise funds for your dream house, then private mortgage loan can be an ideal deal for you.
How Does it Work?
A mortgage loan is one of the simplest ways of arranging funds. The money will be lent to those who provide their real estate as security. A borrower has to repay the loan on a fixed interest rate either monthly or it would be capitalised into the borrowing amount. The term will be set either for one or two years. The mortgage loan will be for non-NCCP and will consider the following aspects:
The Security provided
It is predominant for the Private Mortgage Funder. The lenders will have the security valued and will decide how much they can provide funds on it. He might have thought of selling the property to recover the loan amount, but their valuation will be low as compared to market expectations. Thus, a person who is borrowing the funds has to understand the fact that the Private Mortgage Funder is more comfortable to provide money, but he will do it on principles to protect their interests.
There are various reliable Private Mortgage Funders in Melbourne, Victoria and each have their own requirements and conditions. They will also have different interest rates. However, it is quite an expensive solution to raise funds, and that’s why it is good to look for the best options available in the market before making the final decision.
The exit strategy
As a lender, it is imperative for them to know how the loan will be repaid or exit strategy. Since a private mortgage needs to be repaid within 1 to 2 years at the fixed interest rate, the lender will definitely want to know how the funds will be recovered when the loan expires. They don’t want to take possession at the end because this is a time-consuming and expensive exercise. Instead, they will request a borrower to define exactly how they will repay the funds so that they can freely lend you the money without any confusion.