Private mortgages are also used by business owners and borrowers for investment and to secure short-term loans for business purposes. Private mortgages are contracts executed between a borrower and an investor for a secured loan using real estate properties with provisions only for a fixed term with fixed interest rates and with interest-only payments.
Private mortgages are regulated by the government and for investors, they use private mortgages to gain a higher interest rate return on their investment despite having a higher risk of interest and repayment of the principal amount. Investors are also the registered mortgagees for this type of contract.
Business owners are the borrowers in the contract and these private mortgages are used by them to infuse additional capital to their business, any need for refinancing of previous loans, purchase of equipment or property for the business, and other similar business needs. Aside from Private Business Loans that are available to borrowers, private mortgages and even 2nd mortgages on their current fixed assets or property may be used for the above purposes. Australia’s financing system has already standardized its processes and set a high bar for credit approval so much so that even if a business owner or borrower may be highly qualified for a loan because of his or her good credit standing, there are still instances of declines in their application in relation to micro or small business financing. As a result, a lot of the small and medium enterprise business owners resort to having private mortgages and Private Business Loans from certified and approved private lending companies for easier access and higher chances of being granted a loan for their business needs.
In terms of the processing of the application and granting of private mortgages, Private Business Loans and 2nd mortgages, the private lending companies have the upper hand and can beat the banks to it for the following reasons:
- Lesser scrutiny of paperwork or business documentation. They only require the basic documents such as the business’s Australian Business Number, proof of citizenship or permanent residency, other business-related documents, and audited financial statements;
- Despite higher interest rates and fees involved in applying for the Private Business Loans, 2nd mortgages, and private mortgages, the private lending companies have flexible repayment terms and interest rates for Private Business Loans and 2nd mortgages;
- Since private mortgages have almost the same purpose as 2nd mortgages and Private Business Loans, these private lending companies have tie-ups and good working relationships with mortgage companies that can provide better interest rates and services for availing of these programs;
- Unlike banks, providers of private mortgages and Private Business Loans do not usually focus on the borrower’s credit history but rather on the sustainability and value of the real property or fixed asset that will be mortgaged.
Because there are as many proposals and opportunities as there are private lending companies available, a business owner must thoroughly review his or her choices and proposals to be able to arrive at a good financial strategy in availing of Private Business Loans and 2nd mortgages. Securing private mortgages, Private Business Loans, and 2nd mortgages have an equivalent risk that a business owner should be prepared for. A business owner needing to take out Private Business Loans and 2nd mortgages should have already weighed in the pros and cons of this intended business action so as not to jeopardize the financial position of the business. It would be an incredibly wise move to compare proposals and discuss the impact of this business decision against the books of the company to ensure that the Private Business Loans or 2nd mortgages to be taken out would be put into particularly good use.
More than providing an easier process of securing private mortgages, Private Business Loans, and 2nd mortgages, private lending companies have diversified and improved their services over the years to provide more options to borrowers, especially to business owners who may not be able to get fast approvals from traditional banks because of the stringent processes, poor credit ratings, and lack of solid business documentary requirements, aside from other factors. Their flexibility and ability to find ways for businesses does not only mean more clients for them but more importantly, there will be more businesses that will benefit from the use of Private Business Loans and 2nd mortgages. Start-up businesses, small and medium enterprises, and self-employed individuals will be able to plan more for the operations of their respective businesses and continue to thrive despite the current worldwide business conditions.