It’s the dream of everyone to get a decent home to live in with their families. However, this dream sometimes tends to be challenging to actualize for various reasons, including poor credit, which makes it challenging to qualify for a traditional loan to purchase a property. Due to this, most Singaporeans consider getting private property home loans, although they’ve got some risks. A private property home loan is a facility lenders provide to borrowers to finance the purchase of a property. Like other loans, private property mortgages have specific interest rates and duration that vary depending on the lender. If you want a private property home loan in Singapore, visit https://dollarbackmortgage.com/new-private-property-loan/. Private property home loans are generally provided by individuals or lenders who create their own qualification criteria, rules, and guidelines. These loans pose a greater risk to both the lender and the borrower.
Advantages and disadvantages of private property home loans
Most people consider getting these loans as opposed to traditional home loans because they don’t have numerous restrictions and guidelines. This, however, makes private property mortgages riskier, damaging your financial and personal relationships. Below are some top advantages and disadvantages of private property home loans:
Advantages
- Easy to qualify
Private property mortgage lenders have the flexibility of creating their own guidelines before they finance borrowers to purchase homes. This means that they can lower credit scores or the required down payment. This makes it easier for most borrowers to qualify even with their poor financial position. Private mortgage lenders also finance private property flippers if they see a potential to get better returns.
- Offers flexibility
Private property home loans provide a lot of flexibility in terms of negotiating the loan terms, such as reducing interest rates, restructuring the loan repayment plan, and waiving extra fees.
- Short approval process
The ability to qualify for a private property home loan quicker makes the approval process shorter. Unlike most mortgage loans, these loans don’t require a lot of documents and essential processes such as inspections and appraisals. However, one shouldn’t ignore these processes since they help determine the exact property condition to prevent extra costs through repairs.
Disadvantages
- Short repayment duration
Traditional mortgages run for 15-30 years or longer. However, with private property mortgages, lenders give a very short repayment duration to reduce the risks involved.
- Fewer protections
As stated earlier, private property mortgages are easier to qualify since lenders have the ability to decide on the criteria to use. Private property mortgages have few protections for the borrowers, which can easily affect their financial position. This is why most traditional mortgage lenders ask for proof of income, a predetermined credit score, and the required debt to income ratio.
- Can possibly ruin personal relationships
If you default on paying your loan on time, you might ruin your personal relationship with the lender, which could end up in a court case.
In conclusion, these are the advantages and disadvantages of private property home loans. Before you get such mortgages, it’s advisable to consult with a professional realtor.