As developers struggle to secure finance to complete projects, the role of the private loan lender in Australia is gaining more importance.
If you thought the only place to get a loan was a bank, you’d be wrong. And if the major banks continue to clamp down on lending, they’re likely to become the last place to go!
There’s nothing new about private money lenders in Australia, it’s just that historically, they were the alternative, not the norm. But with banks tightening their lending criteria, the position is changing.
Indeed, when it comes to real estate, private mortgage lenders in Australia, such as Credit Connect Capital Ltd, play a very important role.
Spend it to Make it
By definition, private money lenders are people or organisations who have money to invest, and want to use that money to make them more money. In the case of Credit Connect Capital, they wish to make money for their investors.
These investments are backed by Credit Connect Capital holding the mortgage over real Australian property. And let’s face it, it’s a far more attractive investment opportunity than a term deposit these days!
From the borrower’s point of view, private money may be more expensive, but it’s generally more reliable. Not to mention more flexible, and much faster. So without a doubt, private loan lenders in Australia are playing an increasingly crucial role in keeping the country moving forward.
Developers Struggling to Get Finance
A survey of developers by the Urban Development Institute of Australia confirms the trend. 60% of those surveyed said they were struggling to obtain finance through traditional means to complete planned projects. And 78% expected at least one of their projects to be delayed because of the current lending market.
So it’s no wonder developers are turning to private loan consolidation lenders such as Credit Connect Capital for solutions. Through its Credit Connect Select Fund, the company is providing investors and private lenders in Australia with access to mortgage investment opportunities while, at the same time, helping borrowers fund important projects.
Credit Connect Capital offers construction and development loans; commercial loans; short term loans, and residential loans, from $50,000 to $50,000,000. Most offer 1-4 year terms (short term, 1-12 months), with the LVR around 65%, and certainly no lower than 60%.
Loan Interest Rate
These loans are available from 8% pa, which also raises an interesting point. Traditionally, banks have been seen as a cheaper source of funding for developers, but the difference in figures is actually quite small now.
In fact, with many property deals more a case of getting in and out quickly, the interest rate costs are minimal compared to potential profit.
It’s not just developers who are benefitting from private loans. When it comes to successfully running a small business, private lending is often a great option. Private money lenders in Australia can help a business expand or purchase essential inventory, and can respond much faster than a bank.
Check the Investor List
One word of advice to finish on; just because private money lenders are being seen as more mainstream now, it doesn’t mean all lenders are the same. If you are considering going down this route, look for a company with many years’ experience and excellent investment security in place. If the company has a range of clients, from high net worth individuals to charities, it’s definitely the company to choose.
Disclaimer: This information does not take into account your individual objectives, financial situation and needs. You should assess whether the information is appropriate for you and seek specialist advice from a qualified and licensed advisor.