Do you actually need a private loan?
Private loans have a place in the market, and as we’ve always said. A private loan is a sprinter not a marathon runner. Private loans are specifically designed for short term to medium term use, 3 months to 2 years. They are not a 30-year home loan product! For home loan products with CBA click here.
As a general rule for non-coded private loans, they must be for business or investment purpose. The National Consumer Credit Protection Act 2009, provides very strict rules as to what constitutes consumer lending!
Below we’ve listed instances of when you shouldn’t take a private loan, so you can be better informed as to when you should use a private lender.
No credit check private loans – You’ve been rejected because of bad credit.
If you have a bad credit score a private loan from a private lender may be an option for you, but it must be for business and investment purposes! For the majority of our private lending solutions, we don’t require credit checks!
No doc private loans
Whilst more and more private lenders are requiring some form of financial documentation, our funding solutions are still purist no doc loans in most instances. However just because they are no doc loans, doesn’t mean you qualify! The reason for the loan must still be because you are engaging in business activities or investment activities such as property investment.
The bank rejected you for a home loan
In the instance where a bank rejects you for a home loan, there are second tier and third tier lenders you can go to such as La Trobe. Speak to us today so we can get the right mortgage brokers to help you!
However, a non-coded private loan should not be something you resort to, if you are rejected by a bank, and there are many other solutions.
You want to renovate your principal place of residence.
The lending criteria for non-coded private loans is very strict, in particular about how funds can be used! Using funds to improve, renovate or rebuild your principal place of residence (PPR) is a strict no no for private lending.
Whilst business owners can use their principal place of residence as a form of security to obtain a private loan, providing the funds released are for business purposes. The funds can not be used for any improvement to their PPR. Fewer and fewer private lenders offer private loans where a PPR can be used as security, but at Royce Stone Capital we still have these options for business borrowers.
You want to use a private loan for bridging finance for a principal place of residence.
Taking a second mortgage loan against your current home equity, to then use those funds as a deposit for a home purchase that will be you principal place of residence, isn’t grounds for a private loan! Nor is taking a first mortgage private loan, to acquire another property that will be your future place of residence.
Not only do these transactions breach private lending codes, they also aren’t viable because of their pricing. Where it makes sense to use private loans, is when you are transacting investment properties.
The benefits of private loans is they can transact very quickly, and as such they can help you obtain investment properties quickly. Where property investment finance is considered speak to us get expert advice, and how private loans for investment properties can help you!
To learn more about our private loan solutions click here.
For a confidential discussion so we can hep you thrive, contact us here.
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