Almost everyone is conscious about the interest rate of his loan. There are many people who are willing to take loan from bank for the low interest rate. It is true that interest rate of hard money loan is simply higher than bank loans. It is up to 6% higher than bank loans and it can be even more in some cases. But it also be accepted that hard money lenders are taking risk of those borrowers who cannot obtain bank loan for their inability. Hard money lenders are also willing to providing loan those people who have no credit and income information also. So, it is not a big fact that why hard money lenders are taking high interest rate. There are some investors who have insisted to getting interest and they are taking pre-cost fee from the borrowers as the guaranteed of his ability.
Due to hard money loan is a property base loan, interest rate of this loan strictly depending on the property condition. Hard money lenders are considering interest rate as like below.
Due to hard money loan is a property base loan, interest rate of this loan strictly depending on the property condition. Hard money lenders are considering interest rate as like below.
Considerations of interest rate
- Property location- Property location is very important point of hard money loan to make the interest rate. One may need to pay up to 12%, 13% and 14% for respectively great, average and bad or remote location of his property. This is happening for residential and commercial loan. It will be changed by 13%, 14% and 16% for land loan. So, one should be aware about his property location when he applying for a hard money loan. Lenders are looking for the properties which are in nearest areas.
- Property condition- One borrower may get discount up to 1% interest rate for great property condition. Suppose your property condition is in good condition then you may get up to 1% discount in your figured interest rate. It is equally same for residential, commercial and land loan if the property is in average condition also. But bad property condition can increase your loan’s interest rate up to 3%. In this situation, there is good news for land loan borrowers and which is that there is no effect of interest rate if land loan borrowers property is in bad condition. Overall, you have to aware about your property condition and choose a good condition of property if you want to get loan with low interest rate.
- Credit score- Although credit score is not the strict guideline for hard money loan but hard money lenders are offering some discount for those people who have great range of credit score. One may get discount up to 1% for having good credit score. But this discount is only for residential and commercial loan and not for land loan. This discount is same for average type credit score also. But if you have bad credit score or not have any credit score then your interest rate may increase up to 1%-3% for residential, commercial and land loan also. You will thankful to hard money lenders for that they are lending money without credit information also although they are taking high interest rate. On the other hand banks will strictly disqualifying for having bad credit and not having credit information also.
- Super fast- There is no chance to increase the interest rate as if a borrower wants to need loan earlier. So, you can apply for your loan and ask the lenders to get loan in supper fast time.
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