Hard money lenders are the lenders who lend money in exchange for the real property. It is typically asset-based loan. Hard money loans are mostly issued by private investors or private companies. Interest rates are comparatively higher than other commercial or residential property loans because of the short-term condition of this loan.
This term is exclusive in Canada and USA. This type of loan system was not present since the beginning of time, but later, a few property holders started giving their properties on loan against capitals, and that is why it became common. The loans against them have higher interest rates as compared to other loans.
However, there are a few advantages of hard money lenders which are as follows:
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Simple loan system
Lending money against real property is a very easy process and doesn’t require any paperwork. The loan doesn’t take much time to get approved, and you can have the amount in your hand within one or two days at max. -
No role of a credit score
Credit score matters a lot when you apply for loans, and you might get rejected if you do not pass the minimum mark. Your credit score doesn’t hold much importance when you seek a loan from a hard money lender. They are more interested in the profit and returns. -
Flexible terms and conditions of payment
Banks and other loaning companies have fixed interest rates and this is where hard money lenders differ from them. The interest rates can be flexible, and payment methods and intervals between each can be customized well if you have a word with your lender regarding this. -
Lesser formalities
Taking money from hard money lenders is not a very big task once they agree to loan the money to your property. They pay more attention to the potential property returns rather than your income history and other personal records. This makes the process of lending money from money lenders easier.
These are the few advantages of hard money lenders but do not ignore the downside of this system as there are always two sides to the coin. Make sure that your lender is genuine and considerate so that you don’t face many problems.