Loans can be acquired using physical property one has. The finance acquired by using Collateral is called the hard money loan. These loans are often issued by private investors and non- banking financial companies. They are relatively short term finance loans given for one to five years. The interest rates of hard money loans are cheaper than the conventional property loans as they have short life and greater risk.
Deals involving properties and real estate can acquire hard money loans. Most of the hard money loans use some type of real estate collateral. They can also be backed by some other hard asset. They are great for people who are in need of funds on an immediate basis and need to secure finance quickly. Traditional loans do not suit everyone.
The hard money lending can be done by the borrower when he has a low credit score. Hard money lenders do not worry much about the borrower’s credit score. They are more concerned about the value of the property being used as the collateral.
It is best to use these loans when a project needs financing on an urgent basis as the loan funds are delivered by the hard money lenders within weeks as compared to the traditional lenders which take more than months to be acquired.
The hard money loans are great to purchase a property or renovate it. These loans are of short period of time with higher interest rate but that does not pose a problem for the borrower who can pay back the loan in short time.