Selecting a Lender For a Real Estate Investment: Private Lender vs. Bank Mortgage

The decision about which type of mortgage to get can be daunting when you’re looking to invest in real estate. Do you go with a private lender or a bank? There are pros and cons to each option, and neither should be chosen without consideration and research of your financial situation, income, expenses, and goals. This article will discuss the two primary types of mortgages available to you as an investor and help you decide which one is right for you, as well as how to go about qualifying by using a personal loan calculator for each type so that you can get your real estate investment off the ground and running as smoothly as possible!

Advantages of a Private Loan

You can borrow more money with a private loan than you can with a home equity line of credit (HELOC) because you’re borrowing against your property’s value, not just your equity in it. Another benefit is flexibility; HELOCs have strict monthly payments, whereas private loans often come with variable payments tied to income or interest rates. If you choose an adjustable-rate loan, it will also adjust if property values rise after you buy—although that could mean smaller payments for a while!

Disadvantages of a Private Loan

One disadvantage of taking out private loans to fund your real estate investment is that they are more expensive than bank mortgages. A private lender charges interest, known as points (one point equals 1% of borrowed money), and can sometimes charge origination fees for originating or underwriting your loan. In addition, you are subject to both state and federal laws when it comes to property transfers, which may require you to pay taxes on capital gains each time you purchase new properties with borrowed money.

Comparison Between Banks & Other Sources

One option for those looking to invest in real estate is to obtain financing from a bank. While banks are very strict when it comes to lending money, they do offer some benefits that you might not find elsewhere. Some of these include fixed interest rates and longer loan terms, which mean more stability for your investments than you may have with other lenders. These options make banks ideal for those who know what they want, but if flexibility is important to you, then there are other options available as well.

Things to Look Out for When Choosing A Lender

​A private lender and a bank are both viable options for real estate investment, but there are important differences to consider when deciding which one is right for you. One of these choices can be an excellent option, depending on your personal preferences and financial needs.

What Makes One Source Better Than Another?

When you’re looking for financing for an investment property, it’s essential to ask yourself: who is my lender? When deciding between private lenders and traditional banks, there are four important questions you should ask to find out if one option is better than another:

1) How much can I borrow from each source?

2) What are their qualifications?

3) How long will it take me to get approved?

4) Can I afford monthly payments on top of all my other expenses?

If you can answer these questions using a personal loan Calculator, you’ll be able to make an informed decision about your financing options.

Which Type of Loan is Better?

When considering what type of mortgage loan to get for your real estate investment, you’ll want to consider two things: how much money you need and how long you’ll need it for. Both private lenders and banks offer many different types of mortgages; if you find yourself asking which type is better, a personal loan calculator can help determine whether one or another is more suited to your specific needs.


If you’re looking to make a real estate investment, it’s worth comparing private lenders and bank mortgages—especially if you’re working with little to no down payment. If you take your time, do your research, and weigh all of your options carefully, you can find exactly what you need to get started in real estate investing today!

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