Commercial Private Money Lenders
Clients in the current commercial real estate market do not always conform to the rigid standards put forth by banks and the conventional loan process. While individuals with hopes of acquiring mortgage loans in today’s market might feel hopeless, there is a silver lining. Today’s commercial private money lenders provide alternative-financing solutions for those who are unsuccessful at obtaining conventional financing for their commercial real estate investments.
Hard Money Lenders
One alternative-financing vehicle available for those pursuing a commercial real estate loan is a hard money loan. Hard money commercial loans are typically short term and therefore are referred to interchangeably as bridge loans or bridge financing. These practical financial tools provide the flexibility needed by these borrowers to move ahead with their project. Hard money lenders take the added risk of lending to those turned down by banks, as such, interest rates are often higher than standard mortgage interest rates.
A commercial hard money lender will usually be a strong financial institution that has large deposit reserves and the ability to make a discretionary decision on a non-conforming loan. As these borrowers often do not conform to the Freddie Mae, or Freddie Mac or other residential credit conforming guidelines, their properties may be in financial distress, or it could be that the commercial property is simply not complete and still under construction, not have its permits in place, or any number of other reasons why the property is not in good or marketable condition.
Traditional hard money loans are asset backed loans, meaning the loan is made based on the value of the quick sale of the property. Lenders use loan-to-value (LTV) ratios in assessing the value of the loan. Therefore, hard money loans traditionally have lower LTV ratios.
Contact the specialists at HML Investments today for further information regarding hard money commercial loans.