Unitranche Lenders

Unitranche Lending Basics

Unitranche Lending Basics

Unitranche Lenders is a California based lending institution that offers home-based refinancing loans to senior citizens. This is a Unitranche type of lender. One thing to note about this type of lending institution is that they are primarily used by senior citizens as their primary source for financing home improvements. Although the rates offered through this company tend to be higher than most traditional lenders, many senior citizens choose to use this type of lending because they do not wish to have to use a traditional lender.

A Unitranche lender uses two types of financing methods, namely open-end and closed-end. With the closed-end method, a borrower makes monthly payments against the loan while enjoying a reduced interest rate and a fixed term wherein the loan is due for its next payment. With the open end method, a lender allows the borrower to make payments against the loan while enjoying a variable interest rate and a non-refundable term wherein the loan is due for its next payment.

Many of these types of Unitranche lenders charge higher interest rates compared to other lenders. But this is offsetted by the fact that these individuals are able to save more money in the long run. Here are some advantages that a unitranche lender may offer:

Lenders are not limited to a certain set of locales

Since the majority of Unitranche lenders are based out of California, they may provide financing to residents of all 50 states. A borrower can choose to borrow from a local unitranche lender based on his location. However, non-California residents may also apply for financing from any number of different lenders located in other regions. In this way, a person can choose to obtain a loan even from a different country if he so desires.

Flexible Term

Unitranche loans typically offer borrowers a longer period of time to repay the loan. The typical lending term for a California unitranche loan is thirty years. But these loans are not tied down with any kind of fixed rate. Therefore, borrowers have the option to pay back their loans earlier than the anticipated terms.

Absence of Hassle-Free Financing

Unitranche loans typically do not require borrowers to submit any kind of collateral to secure the loan. Typically, a borrower can access the cash within a week after applying for a loan through an online application. This absence of collateral security also makes it easier for borrowers to obtain a lower interest rate as most bank lenders require some kind of collateral to obtain a loan.

Higher Interest Rate

Because there is no collateral required by most unitsranches lending institutions, the interest rate on unitranche loan is normally higher than those applied to other loans. Typically, a borrower will receive a fixed interest rate for a set number of years while they pay on their Unitranche unit. After the expiry of the term, if they decide to refinance or sell their home, they will only have to pay the interest rate of the time when they obtained the loan, instead of being subjected to the higher standard interest rate for pre-existing loans. As well, most lenders prefer to lend money to borrowers who possess the actual tangible ownership of the home that they are going to use as collateral, so that they know that the equity in the home will be available should the borrower need to make any kind of mortgage repayment.

One important thing to remember is that most lenders do not offer prepayment penalties on their Unitranche lending programs. For this reason, borrowers should be careful of lenders who do not offer this kind of feature. In most cases, these lenders require borrowers to sign an additional mortgage term contract that contains an early repayment penalty. This is a wise practice that ensures that borrowers are completely aware of the additional costs and fees associated with their loan before they commit to such an agreement. This can be a vital feature for borrowers who need to repay a portion of the mortgage in a timely manner.

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