For those who do not know, a private moneylender is a non-institutional lender that offers short-term mortgages. The loan is often used to purchase a property or to renovate one. A moneylender in Singapore is also known as hard moneylenders. They issue private money loans to long-term investors as well as short-term fix-and-flippers looking for a cash-out refinancing, quick funding, or renovation project.
How Private Moneylenders Work
Usually, private moneylenders provide mortgages that are guaranteed by a real estate asset. The loans are typically used to buy a multifamily building, condo, or a house. A private moneylender can be a well-known private lending company. However, oftentimes, they can be anyone, like your personal friend. Thus, they are sometimes called relationship-based lenders.
People are usually referring to hard money lenders when they think about moneylenders. The reason for this is that a hard money lender offers short-term real estate mortgages used to renovate and buy an investment property. This type of loan is ideal for both long-term buy-and-hold investors as well as short-term fix-and-flip investors.
Who Are They For?
If you are a short-term fix-and-flipper, then a private money lender is right for you. But, a private loan lender is also great for long-term investors who are seasoning a property before refinancing or planning to renovate a rental property before refinancing into a permanent loan.
These are the types of people who are ideal for private money lenders:
- Long-term investors who require seasoning the property.
- Long-term investors who cannot qualify for a HomeStyle Renovation loan, 203k mortgage, or a conventional loan.
- Buy-and-hold investors who are looking to buy and rehabilitate a property before refinancing using a conventional loan.
- Long-term and short-term investors who really need immediate financing.
- Fix-and-flippers who are planning to buy, rehabilitate, and sell a property within a year.