Essentials of Hard Money Lending

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Essentials of Hard Money Lending

It is essential to understand what hard money stands for, so the first question we’d answer is; what precisely is a hard money lender?

Who is a hard money lender?

Hard money loan is a short term credit protected by real estate as the main collateral. A hard money lender can also be compared to private investors as they only specialise in hard money loans – loans that are offered on real estate property as the security. The lender can be a group of investors, an individual, a legal money lender or a registered mortgage broker using his/her own funding.

Why choose hard money loans?

There are many home buyers who have chosen to go for hard money loans rather that getting a mortgage the conventional way through banks, but why? The only reason that makes hard money loans a go-to option for most home buyers is the fact that they are less of a hassle, quick and time-saving. Although the interest rates are so high compared to what other lenders offer, you can borrow the money for a short time and settle your need as quick as you want it.

Who can borrow at such high interest rates?

There are certain people who are popularly known to prefer these short-term, high-interest loans. Here are a few:


Sometimes, real estate investors may encounter a super deal on a property that needs to be taken ASAP. There are licensed money lender agencies specializing in hard money lending and are always ready to offer loans to such investors in case they have no cash on hand. The loan can be offered or fast-tracked by a hard money lender quickly and easily since they too are real estate investors.


Whenever a house in poor shape and condition is put on the market and there are chances it can be renovated and fixed in a couple of months, most individuals who could be interested in the property will not go for a 10-15 year loan to acquire the property. Instead, they will choose the short-term, high-interest rate loans offered by hard money lenders.


Most contractors or builders use the high-interest, short-term loans to buy a property and further develop the infrastructure. They then put the new structure on sale and pay back the loan quickly when the sale is made.

Bad credit

Some people may have cash on hand to make down payment for a conventional loan, but banks and other financiers reject them for their credit issues, previous foreclosure, default or simply bad credit history. They can use the cash they have to get hard money loans and buy whichever property they wish to before they become unavailable.

If you do not like long procedures, lots of paperwork and widespread qualifying processes as required by banks, you can consider getting a fast loan from the hard money lenders. In fact, the entire process would take just a week or less. As always, as long as you practice cautiousness, hard money lending is a great alternative you can consider for your financial endeavours.