We are often asked by potential investors why borrowers would pay a higher rate of interest rather than borrowing from a bank at a lower rate. The simple answers are speed and certainty.
While the banks can take weeks and often months to finalise a loan there are many scenarios in business where borrowers are prepared to pay a premium, particularly where the benefit of obtaining the loan with speed and efficiency outweighs the increased cost.
Typical examples include:
- A borrower risks the loss of a deposit if they can’t come up with the funds to settle a property.
- Payment of an outstanding ATO debt being required to be made in full prior to a bank agreeing to refinance a loan.
- Bridging finance whereby a borrower may need to settle on a property they are buying before the sale of an existing property has been completed.
- A business opportunity from which the potential return in acting quickly outweighs the cost of the loan from a private mortgage lender.
The typical borrower is looking to transact and finalise the loan with faster closing times than the banks and values the certainty of securing funding for a short period over finding the best rate.
We offer small to medium business or individuals access to business finance with a fast, efficient and sensible lending approach whilst still adopting stringent lending criteria enabling our borrowers to access funds at a premium to other traditional lenders but in a timely and efficient manner.
This article appeared in our November 2019 Investor Newsletter – download the full newsletter here.