With major banks increasingly reticent about loaning money, it's no surprise that private money lenders are stepping up in Australia.
As the country's major banks continue to clamp down on lending, an increasing number of private and commercial borrowers are turning to private loan lenders in Australia.
In fact, non-bank finance groups, such as Credit Connect Capital Ltd, are now being described as Australia's 'fifth bank'.
In the past, private money lenders in Australia were seen quite separately from the Big 4 Banks, but they are now being recognised as an important source of funds for major development projects, as well as providing lucrative investment opportunities.
Excellent Loan Options
And with banks tightening their lending criteria on residential property developers, the likelihood is that more will turn to private lenders for business loans.
Credit Connect Capital offers excellent loan options, from $100,000 to $50,000,000, for construction and development, in exchange for registered mortgages over the borrower's Australian real estate.
With decades of experience in finance, property and development, the company is enabling major residential and commercial projects to go ahead.
New Investment Opportunities: Private Mortgage Loans on the Rise
Credit Connect Capital believes the timing is perfect. With interest rates at an all-time low, investors are unhappy with traditional investment options and looking for more profitable opportunities.
By stepping in to help developers, the company can also give investors access to new mortgage investment opportunities.
Of course, there is nothing new about getting private mortgage loans in Australia but, in the past, they were seen as being pretty much on the side lines. But as the banks increasingly refuse loan applications, the demand for private solutions looks set to increase dramatically.
These used to be called 'hard money' loans, because they were secured by a hard asset, such as property. These days, however, they are also hard to get through traditional means!
Returns From 6%
Private lenders differ from banks in that they are happy to offer short term loans, which suits many developers - and investors, especially when the latter can enjoy returns from 6%.
It might help to look at a case study. First mortgage funding of $20,000,000 was required to help purchase a property in North Melbourne. The property holds a development permit for Mixed Use, to include a supermarket, shops, offices, and a residential component of 299 apartments.
The property value was $30,900,000, the LVR was 64.51% and the loan term was 12 months.
By funding this loan, Credit Connect Capital was then able to offer its investors an outstanding opportunity to earn 10% pa on their money, with monthly distribution payments directly into their bank accounts.
With term deposits offering, at best, 3%, that is clearly a very attractive investment.
Smart Finance at Work
What's more, returns are fixed for the term of each mortgage, and all costs associated with the mortgage are payable by the borrower.
This is smart financing at work, something that seems to be sadly lacking in banking circles of late. Using money to make money, and to get projects completed, makes sound business sense, so it's no wonder more people are turning to private money lenders in Australia!