What Commercial Mortgage Portfolio Lenders Can Offer That Banks Cannot
Fully funded, direct portfolio lenders like First Financial Capital have the freedom to offer terms that big banks are unable to match.
LOS ANGELES, May 26, 2015 /PRNewswire/ -- When banks are constructing a loan agreement, they do so with the consideration that they may choose to sell that loan to another party on the secondary market. Due to regulatory guidelines imposed as a reaction to the recent financial crisis, any loans sold on the secondary market must meet a strict set of parameters that are often unfavorable to borrowers who need quick and convenient loans. Yet, when companies design loans to keep in their own portfolio rather than selling them, they do not have to abide by these restrictive guidelines. This gives portfolio lenders, such as California-based First Financial Capital, a huge advantage when crafting a set of loan parameters that are amenable to borrowers with special, short term mortgage needs. Here are some of the terms that First Financial Capital is able to offer borrowers that banks cannot:
- High LTV (Loan-to-Value) Ratio – The loan to value (LTV) ratio is determined by the percentage of the appraised property value that can be offered by lender. Typically, banks can only offer loans with fairly low LTV ratios in order to avoid taking excess risk. Excessively risky loans can be tricky to sell on the secondary market, but since that is not the aim of First Financial Capital, they are able to offer borrowers loans with LTV ratios that have gone as high as 80 percent. This means that borrowers are able to close on prospective properties without needing to make up for the remainder of the property cost with too much of their own capital.
- Fast Funding – One of the reasons that borrowers return to First Financial Capital after borrowing from them in the past is to avoid the headaches associated with being unsure if they will receive a mortgage on time, or even receive the funds at all. With First Financial Capital, borrowers seeking commercial mortgages in Los Angeles and beyond can count on a reliable underwriting and approval process, and a timely delivery of funds once the loan is approved.
- Short Term Repayment Structures – Because banks prefer to accrue interest for many years down the line, they will often impose pre-payment penalties to prevent borrowers from paying the loan back faster than the initial agreed upon term. These penalties are meant to lock-in borrowers and discourage them from repaying the loan on their own timetable. First Financial Capital, on the other hand, has no such penalties, allowing borrowers to pay the loan off early and save on interest payments. They also offer their borrowers the option of paying only the interest during the first year to help keep short term costs down.
The convenience, speed, and attractive terms of loans from portfolio lenders like First Financial Capital make them incredibly worthwhile for any borrowers needing to quickly close on a prospective property. For more information about their loan terms or their experience financing properties in California and beyond, you can call First Financial Capital at (310)694-5060 or reach them online at www.firstfincap.com.
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SOURCE First Financial Capital
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