No Doc Property Loans

No doc loans are a “rate for risk” type product as they rely on the value of the asset rather than the looking at your personal income or other sources of income to approve your loan.

The funder will look at the equity in your property, the location and sell-ability to determine your interest rate. In most cases a first mortgage private loan will range from 7% > 12% depending on the lvr and your credit history. The rates for a second mortgage range from 1%>2% per month.

Funders will charge an establishment fee of between 1 > 2% and costs of Valuation and Legal Costs in drawing up mortgage documents are payable.

The interest rates charged at any time reflect a balancing of economic conditions, interest rates charged by other providers and the risk associated with the transaction. Generally, pricing is determined by:

• LVR (level of gearing)
• Loan term
• Security type
• Security location
• Loan type
• Borrowers balance sheet
• Borrower track record
• Credit Worthiness

Private mortgage loans are to fill the gap between securing additional finance or the sale of an asset.

Private lending does not offer any features as traditional funding as they are interest only for a fixed term.

The approval process for Private loans are fast and do not involve much paperwork.

Banks might have knocked you back or you may already know what their answer would be if you applied. It may be that you need the funding in days, you need the funding only for a short period or you need the funding and you have bad credit.

Fees normally include an establishment fee, valuation fee for the asset that they are lending against once the loan is approved subject to valuation, legal fee for the lawyers to prepare loan documents once the valuation satisfies the lender’s requirements and a Brokers Fee payable at Settlement.

The most common reasons for obtaining a private mortgage are:

1. Banks will be too slow. You need the funds quickly.
2. You only need the money for a short amount of time. There’s no point setting up a long term bank loan.
3. Your accountant has not completed your tax returns or financials required by the bank.

You don’t need all the paperwork the banks require to obtain private mortgage lending. All you need is basic financial information to complete the application and equity or cash to contribute to the deal. You also need a strong exit plan. This exit plan is a strategy on how you are going to repay the borrowed amount.

• Signed Application Form
• Borrower ID
• Mortgage Statements
• Rates Notices
• Exit Strategy
• Insurance Polices

With First Registered Mortgage’s, money is lent to a person borrowing against the security over the real property such as residential, commercial, industrial or rural land. Interest can be paid monthly in advance or capitalised up to the maximum lvr.

A second mortgage typically refers to a mortgage (or secured loan) that ranks behind another loan or mortgage against the same property.

In most cases a second mortgagee will require an agreement with the first mortgagee that regulates the priority amount or amount secured and payable under each loan. This agreement is called a ‘Deed of Priority’ or Priority Agreement.

A caveat is a document that can be lodged on the government records of ownership (Title) of the secured real estate. A caveat will stop all other dealings on that property. This prevents the sale of the property or acts as a warning to other lenders that the property has been used for security. Unlike bank loans, caveat loans are subsequently easier to approve and are a fast way to access necessary capital.

Bridging loans are short term loans that are taken out to buy a new home before selling an existing property. These often have higher interest rates and are interest only loans that are repaid after the property has been sold.