It’s all about exit

It’s an obvious question but most people don’t spend a lot of time talking about it – “how will I pay my mortgage or loan back?”

When borrowing funds from a Mid Market or Private lender an exit strategy is very important as the term is usually less than 24 months and the payments can be interest-only. Without a well defined exit the equity in a property can be lost to interest as no principal is repaid. To get an approval, you can significantly improve your chances by helping a lender understand what your plan for repayment is.

Traditional banks lend for longer terms (usually greater than 24 months) and because their payments are amortized – every payment includes interest and principal – they know that as time goes on you will not only pay them interest but you will also give them back the principal – this is not the case with Mid Market or Private lenders.

When looking to borrow money always have a plan for paying it back. Seems like an obvious truth but in our work we rarely see it.

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