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Traditional Lending
What are the key factors to consider when deciding between traditional lending institutions and alternative financing sources?
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5 Replies
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Great question! I would love to hear your opinion @Money_Man , @Suman.Chakraborty , @manjitrukhra @MichaelGreene , @Danielle_Chiasson , @kailu
There are so many to pick from. My Top 2 Key Factors would be:
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Renovation Size: I personally like big renovation projects which means they aren’t considered livable. So I’ll go for a private lender.
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Environment: I used to love starting off BRRRRs with private money and then refinancing to an A/B lender. With the changes in interest rates and A/B lenders becoming more conservative in the GTA, I am finding it harder to do at the moment. I see more people starting with an A/B Lender from the purchase.
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A few key factors to consider would be:
1. TIME – how fast do you need the financing for? Traditional lenders take about 30-45 days for a purchase and about 2-3 weeks for a refinance.
2. CREDIT – if your credit is below 600 you may have a hard time getting approved with a traditional lender.
3. TYPE OF TRANSACTION – Renovations, major construction projects, private sale, little to no money down purchases, purchasing a student rental are some examples that may require an alternative lenders.
4. INCOME – if you are purchasing a property and don’t have enough income to service the loan a traditional lender will decline your application.
These are just a few examples.
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Traditional lending is cheaper but lacks speed & flexibility. Private lending is creative, guns blazing & door-kicking if your Ironman as an investor but it’s dangerous if you are lazy and can bleed you if you or your Mortgage Agent don’t know what your doing
For me the lending solution is about what fits my situation what fits my acquisition/cashflow model; the financial costs are a part of doing business.
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If you can qualify with traditional lending thats the best option. Because its much cheaper and have longer terms than alternative lenders . YET, its much harder to be QUALIFED with traditional lenders.
Your income, credit score, down payment, assets , liabilities will determine whether you fit to traditional lenders or not.
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great insights here! thanks @PrivateMortgageswithMurat
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