Short-Term Investment Property Loans: Get Quick Capital

By: Aaron Robbins0 comments

In the realm of real estate investment, time can be of the essence. Savvy investors understand the importance of seizing opportunities quickly to maximise returns. Short-term investment property loans have emerged as a valuable financing option for those looking to capitalise on time-sensitive property ventures in Australia.

In particular, private lending has gained popularity due to its ability to provide funds promptly, enabling borrowers to expedite their investment goals. This article explores the landscape of short-term property loans in Australia.

Understanding short-term property finance

Short-term property loans are a type of bridging finance as they are designed to bridge the gap between the purchase of a property and the availability of long-term financing. These loans are particularly useful for investors who require immediate funds to seize time-sensitive investment opportunities, renovate properties for resale, or resolve temporary cash flow constraints.

Traditional lending institutions often have lengthy approval processes, making them less suitable for time-critical transactions. However, private lenders offer a flexible alternative, granting property investors quick access to capital for shorter durations, typically ranging from a few months to a couple of years. These loans are secured by the property being purchased or an existing property owned by the borrower.

Is a short-term property loan an interest-only loan?

Short-term property loans can vary in terms of their repayment structure. They can be interest-only loans or a principal and interest loan, depending on the terms and conditions set by the lender and the borrower’s preferences.

Interest only loans

Interest-only loans allow borrowers to make interest-only repayments that only cover the interest charged on the loan amount. This means that the principal amount borrowed remains unchanged throughout the interest-only period. Borrowers typically choose this option to have lower monthly repayments during the initial phase of the loan.

Can I make principal and interest repayments?

Principal and interest loans require borrowers to make regular repayments that cover both the interest charged and a portion of the principal amount borrowed. These loans aim to gradually pay down the principal balance over the loan term. This repayment structure is the more common option for longer-term loans, such as traditional home mortgages (commonly used for owner-occupier home loans).

How to get quick capital using short-term property loans

Private lending has emerged as a powerful solution for borrowers seeking expedited funding. Unlike traditional lenders, private lenders prioritise efficiency and focus on the asset value rather than stringent credit checks and extensive paperwork. This approach enables investors to navigate time-sensitive investment opportunities without being bogged down by bureaucratic red tape.

  1. Quick approval: The primary advantage of private lending is the speed of approval. Investors can avoid delays caused by conventional loan application procedures and secure the necessary funds swiftly.
  2. Flexible loan terms: Private lenders offer customisable loan terms, allowing borrowers to tailor the loan duration and repayment schedule to suit their investment strategy. This flexibility is crucial when executing short-term projects or addressing immediate financial needs.
  3. Asset-Centric approach: Private lenders prioritise the value of the property rather than relying solely on credit history or personal financial standing. This approach makes private lending an accessible option for borrowers with less-than-perfect credit or unique financial circumstances.
  4. Diverse investment opportunities: Private lending offers access to a broad spectrum of investment opportunities across both residential and commercial properties that may not be available through traditional lenders. Borrowers can leverage private lending to invest in property development, renovations, fix-and-flips, or other ventures with rapid turnaround times.
  5. Enhanced profit potential: By enabling faster property acquisitions and transactions, private lending empowers individuals and businesses engaged in property investment to capitalise on lucrative opportunities that may otherwise be missed. The ability to move swiftly in the market can lead to enhanced profit potential and a competitive advantage.

Finding Reliable Private Lenders in Australia

The private lending process is streamlined, often involving a simplified application, minimal documentation, and a swift evaluation of the property’s value. Private lenders can make prompt lending decisions, providing borrowers with access to funds within days which significantly accelerates the investment process.

With access to over 200 of Australia’s top private lenders, Diverse Funding Solutions can help property investors partner with reliable private lending professionals to access the quick capital they need to expedite their property ventures.

Want to find out just how quickly we can assess and fund your short-term property loan application? Talk with the team at Diverse Funding Solutions, today.

Frequently asked questions about short-term property loans

Should I use a bridging loan or a short-term property loan?

As short-term property loans are a form of bridging finance, it’s important to carefully assess both loan products to find the best funding solution for your particular needs.

Are short-term property loans the same as investment home loans?

While short-term property loans are a form of lending against a home, they can also be used to purchase commercial real estate, so they are not generally considered a home loan product. Investment home loans and investment mortgages offered by traditional banks usually have loan terms between 10-25 years, whereas short-term property loans are, well, short-term!

How is a short-term loan repaid?

A short-term property loan offered by a private lender is generally repaid using a repayment schedule that’s devised once a suitable exit strategy has been determined. Commonly, a short-term loan is repaid once the borrower refinances to a longer-term finance solution such as an investment loan or investment mortgage.

What interest rate applies to short-term property loans?

Much like many other investment loans, home loans, business loans and even personal loans, the final interest rate that you pay on your short-term property finance will depend on your borrowing power, exit strategy, the LVR against the property value, as well as other factors. It’s important to remember that while short-term loans may come with higher interest rates than other forms of property finance, they’re mostly only offered by lending specialists and may not be accessible through other financial institutions such as big banks and credit unions.

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