If you are like most homeowners and people looking to invest in property but are still short on cash, you try to stay up-to-date with the state of the economy and in particular any changes in the mortgage industry.
Late last year, I read a Forbes article forwarded to me by a friend that predicted how a little-known and different player in the market was going to snatch away the mortgage market shares from investment and commercial banks. Yes, the emerging icons of social financing have proven that aspiring and current homeowners trapped in bad mortgages no longer have to tolerate big banks because there are ready lenders offering ready to invest in loans and can offer better terms and lower rates and are loved by many for their flexibility.
On the outside, investment and commercial appear impregnable and have a firm grip on the market. They set the terms and homeowners strive to meet them. The traditional banking system is not transparent, and for long-term financing options, social financing couldn’t have matured at a better time. Emerging social lending companies are taking over the mortgage industry by gradually transforming the lending environment using technology.
In December 2015, Inside Mortgage Finance reported that non-banks making use of social media and new technologies are rapidly gaining the mortgage market and were responsible for about 37.5 percent of the US mortgages. In 2013, these new lenders controlled only 26.7 percent of the market—a massive 10 percent leap. The big leap is proof that more individual and corporate lenders are trusting these social borrowers who enjoy better rates, terms, and lots of perks. Simply put, social finance mortgage has put back the simplicity and adventure that is home buying or property acquisition.
Are there any other reasons to choose social finance mortgage?
Mention the word ‘mortgage’ to any ordinary American and ask them what visions flashed in their brains and they will most likely mention: excruciating application process, painful long waiting, high interest rates, and unfriendly banks. Many suffer such horrors and face difficult times because they have not really given social mortgaging options a chance or are unaware of how they work. Do not be one of them.
a) Get a mortgage that is as unique as you areWhen you are looking to buy a new home, you are very specific as to what your castle should look like based on your preferences and budget. When applying for a social mortgage loan from organizations, businesses, or social groups, you will get to enjoy flexible down payment typically between 10 and 20 percent. In today’s economy, it is impossible to get such a deal from a commercial bank on a long-term mortgage loan.
b) Low monthly paymentsDepending on how much you are borrowing and how long you want to or have to pay back the loan, the monthly repayments for social financing options are often way lower than those of traditional banks. The mortgage repayment packages are structured to make it easy for homeowners to make payment while pushing on with life. The ‘social’ element in these types of loans define how in-touch the lenders are with the borrowers and operates to help homeowners more than to make profit.
c) No fees and no catchMortgage is a long-term investment that forms long-term relationships. Adding to the reasons why many people dread mortgage, the often sly terms and offers with deliberate catches make people shy away from banks. Peer-to-peer and social financing has become a way for people to take advantage of how the social media has brought the world together to help each other out. The pain in dealing with bank-appointed realtors, hidden fees, and confusing terms has driven homeowners to consider the newest lending option in the market and if the statistics are anything to go by, they are loving it.
According to the report on Forbes, PwC forecasts that social lending market share could grow at an average 33 percent annually to top at $150 billion by the year 2025. The main reason for this, the article reads, is that lenders use the platform to make it easier and fast for the borrower to access the funds they need.
While social finance mortgage is still a new entrant in the property market, it has caused enough shake-up in the housing industry to warrant attention. Anyone looking for financing for a home or business should add social finance mortgage on his/her list of potential sources of funding to seriously explore.