Private Lending School

Lesson 3: Speed of Funding - How to Determine the Reality of "Fast" Funding

So you need a fast funding solution? Most of the funders in this space seem to promise exactly that, so how do you work out how long a funder is actually going to take? It’s all about asking the right questions and doing your homework.

So here are the primary factors that influence speed:

Borrower factors 

1) If you are going for a loan you need to get your rates notices ready for the lender. 

2) There will be requirements relating to ID so make sure you have more then your licence when you go to sign documents. 

3) Pick a solicitor that is across mortgage documents to assist you. 

4) You need to know what mortgages and caveats are on your title and what their processes and timings are to refinance including payouts so there are no surprises. 

5) Where you have multiple loans with the same lender you need to understand whether the loans are cross collateralised. If they are you won’t be able to offer a lender one asset as security as the lender will need to take all the loan positions into account. 

Lender Factors 

1) For a second mortgage loan, does the lender settle with a caveat or require a second mortgage and a deed of priority with the first mortgagee? If it is the latter, then this can take 1-2 weeks depending on the first mortgagee. Some mortgagees won’t grant seconds so the only way you can get a second is via a caveat.

2) Does the lender need formal valuations? If so, it is unlikely they can fund in 24 hours as you can expect the valuation to take a minimum of a couple of days and typically one week or more waiting for the availability of the valuer. 

3) Which lawyers does the funder use? Some lawyers take 2 days to produce documents while others do it in hours.

4) Does the lender have their own money or are they raising it from investors? Check their website and that will tell you. If they have an investor page you can assume they will need to package up the deal and get investors onboard unless they hold the liquidity. This rarely happens in 24 hours.

5) Are they actually a lender? Many businesses in the market look like lenders but have no money and simply shop the deal around when they get it. 

Tip: If you are going to sign a term sheet and speed is important, then understand the reality of timing. Consider getting the Lender to incorporate a term such that their term sheet is void if they haven’t got unconditional loan documents to you by an agreed date. 

The reason we are known as the fastest in the industry, is that we use our own funds, we do our own in house valuations, settle with caveats on second registered mortgages and have the fastest lawyers and processes in the business. 

Keen to know more, check out the following links:

• The Work Hard, Play Hard Referral Program;
• The Secured Lending Product Matrix
• Download the E-Book. The Ultimate Guide to short term finance.

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