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Want To Become A Lender? - Lets Start By Learning What Exactly Is A Private Mortgage.. A private mortgage is a type of property loan or finance facility that is secured against real-estate, and is funded by a private investor, AKA - peer, person, or business, as opposed to the traditional funding channels from the major banks and finance companies. Private finance is particularly popular due to the fact that the qualification process is far easier to obtain an approval as compared to the major lenders. Once upon a time private mortgage lending was usually raised via a combination of solicitor’s funds, and surplus funds from their high net worth clients. Solicitors would put borrowers in touch with wealthy people who had spare funds to lend, whilst protecting their private clients loan arrangement by registering a (1st) first registered mortgage over the borrowers property being offered as security. Meaning the facility is protected by the security property at all times.
With the increased competition and industry deregulation previously introduced in the 1990's by the Australian government, private mortgages became less commonplace. However, the prominence of privately funded mortgages has re-emerged in a big way as credit conditions offered by the banks have been tightened as a result of the Turnbull government’s inquest into the banking industry being played out within the royal commission.
In a recent warning by one of Australia's largest lenders, Westpac (CEO) Brian Hartzer told attendees at The Australian Financial Review that: "any move to step back from the banks current automated lending decision making would be an overreaction and will have an immediate impact on borrowers". He further states: "It's going to have a consequence on cost of funds, efficiency, and the availability of credit, and is most likely going to hit the people who are at the lower end of the spectrum" - Mr Hartzer said. Westpac warned against the return of manual home loan assessments saying it would also cause an increase in interest rates, while another leading bank analyst warned of a looming credit crunch as a result of the royal commission. Mr Hartzer's comments built on a warning from Australian Banking Association (CEO) Anna Blighon on the first day of the conference, where she warned of the unintended consequences that could flow on as a result of harder stance being adopted towards lending assessments. "Tightening access to credit for SME, can push more customers out of the regulated banking sector and into non-bank lenders" Ms Bligh said.
Currently peer to peer (P2P) private lenders have an advantage over major banks primarily because they do not require complicated documents and are able to provide Lo Doc approvals much easier than the banking sector. Due to the flexibility of private credit being so easily available, the P2P lenders are able to achieve higher returns as a result of the increase in credit risk, thus being a far more profitable investment than current bank term deposits.
By virtue of the fact that banks have in the short term slowed their lending appetite right down, has been the catalyst reason that sophisticated investors have been seeking to diversify their income into the secured mortgage lending market. What was once a walk in the park with main stream vanilla financial service providers, is now almost impossible to get approved through the banking system. And with no firm indication or date as to when the curtain will come down on this royal commission, means there will be many attractive opportunities that exist for the astute investor to establish their peer to peer lending portfolio.
Even long after this royal commission is wrapped up, they still have the long process of re-adjusting their credit policies, and an even more difficult task of appointing new executive board members and staff to fill in the vacancies left behind after all the recent mass resignations from numerous banking executives. It will be some years before they completely recover, leaving the door open for the intelligent investor to establish themselves in the industry. Based on the current spike in privately funded mortgages across Australia, the purchasing of mortgage securities from the banks looks set to continue growing in a big way.
How To Become A Peer To Peer Private Lender.. Becoming a peer 2 peer private lender isn't as hard as it seems. As long as you have the correct business support systems in place, the process of private lending is quite simple and lucrative. Creating your own passive income stream is certainly possible as a safer investment to the stocks and bonds market. So long as you observe industry basics and know how to perform the simple due diligence process for each deal, - viable returns are definitely possible. The comforting part of private lending is the fact that "You-Yourself" become the bank and "registered mortgagee" that is noted and secured over the borrowers real-estate title. This means that you are in full control at all times, a much safer position to be in comparison to the stress imposed when deciding to push the button whether to buy or sell a local or international stock.
"Investing shouldn't feel like your gambling.. There is a viable alternative, its called peer to peer secured private lending".
As a P2P Private Lender, risk is mitigated by virtue of the fact that borrowers must provide real-estate security with every single loan. With sensible credit making along with responsible LVR restrictions, exposure to risk is minimal, once again underlining the most comforting part that: "You-Yourself-Personally" are the Registered 1st mortgagee over the borrowers real-estate no matter where the clients property is located Australia Wide. This is the most attractive part of becoming a P2P secured lender. This not only provides peace of mind, but also complete control of the subject appreciating asset all times, and demonstrates why the legal fraternity across Australia have been the main pioneers and advocates of private funding dating back since the 1950's.
With the right guidance, there is no reason why a person themselves cannot start earning high returns by becoming a private lender and gearing an indefinite source of revenue as a stable income stream. We recommend professional legal and financial advice at all times before any consideration be made. Should you wish to find out more please call: 1300 562 643 - Alternatively send us an email. Step by step guidance available - Australia Wide..
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