Borrowing from a private lender is a great way to introduce capital into a small business or for purchasing a home. There are a great many ways to leverage money borrowed from a private lender, and your purpose will dictate the best course of action when it comes to structuring repayment terms or accepting an interest rate that makes sense for your business or family life.

Borrowing for a Mortgage Loan

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Many new homeowners choose to use private mortgage lenders for their home buying needs rather than utilizing the services of a traditional financial institution such as a bank, for this borrower need. This is because private lenders are often easier to deal with when seeking a lower down payment or larger loan amount as a homebuyer.

Private lenders typically take less time to make a decision, ask for less paperwork, lower tacked on deductions and costs and are typically less stringent on credit score requirements than a traditional mortgage lender. Private money lenders are far more appealing to many new homebuyers for these reasons, but they are also a great source of capital for homeowners who are looking for a refinance or an additional capital infusion in order to add on a renovation or upgrades to their current home without dipping into savings.

Borrowers who fit this bill are typically homeowners with a few years of monthly payments under their belts and a large quantity of information behind them. The truth is, refinancing a home loan is something that every homeowner should be constantly on the lookout for. The opportunity to lock in a better rate on your mortgage payments can save you tens of thousands of dollars over the life of the loan. As well, as long as a lender is willing to extend the credit to you, you can refinance as many times as you’d like. Of course, a refinancing opportunity comes with new origination fees and a new loan document, which is often why borrowers choose to refinance with private lenders instead of traditional banks for the ease of access and streamlined service offered by these financial outlets.

Homeowner borrowers also like to take advantage of low rates to add value to their homes. The renovation industry is a $400 billion per year business in the United States, and homeowners all across the country are perpetually sinking money into the asset that is their home. This is because the home is where you spend most of your downtime and it eventually becomes a financial tool for moving into a more luxurious or larger home that better suits your needs later in life. The ability to add to its underlying value at a rock bottom interest rate is something that is incredibly attractive to all property owners in the U.S. and beyond.

Borrowing for Business

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Small businesses also rely on lenders for building up corporate capital. Startups, in particular, rely on private lenders to front them cash for payroll and software for small businesses that must be purchased upfront. Before the work can begin, small businesses need to find a location and fund the down payments on rent, paychecks, software and hardware needs, and even a preliminary marketing budget to get the word out about the business’ offerings. This is a capital intensive period in the life of any business, and many smaller outfits often turn to private lenders to help them get off the ground in these essential first months.

In order to build out business offerings like a mobile app, many startups turn to private lenders, who offer far better rates over an individual’s credit card for these initial purchases. With private institutional funding, you can keep total ownership over the company as well, which is often an important consideration for startup owners in these early days.

Private lenders are a great way to finance many of the purchases that we engage in. Make sure you weigh all your options when approaching a new business venture or home buying opportunity.