Benefits of Private Home Loan From Friend/Relative's Bank

A private home loan from a relatives or friend’s bank provides you with an option to secure the funding necessary to purchase a home. Using this resource may be an important to an individual with no established banking relationships or who has recently moved to an area due to relocation or a need to be near family. The relationship that the lender has with your friends and family can help accelerate the loan approval or allow you to obtain a loan on a more favorable basis.

Using Established Relationships

The established relationship that your friend or family member has with the bank is important to you because it is the basis of this relationship that allows you to approach the bank. Obtaining a meeting with a loan officer or other official to acquire the loan is important and in many cases, it is the relationship that can remove some of the requirements and other conditions that other borrowers may face when applying for the same loan.

Inquire as to the Nature of the Relationship

To benefit from a friend or relatives relationship with a bank you should inquire as to the nature of the relationship and whom they may know in a position of authority or decision-making. Simply opening a passbook savings or checking account will not be sufficient enough for you to benefit from contacting the bank for your private home loan need.

Be Personally Introduced

The benefit that comes from the relative or friend’s bank has to be rooted in their ability to make a telephone call on your behalf or walk you up the bank manager or president, depending on the size of the bank, and personally introducing you. The goodwill between your friend or relative and the banking official should transfer to you and allow you to focus on how the bank can meet your funding needs.

Leveraging the Relationship

Having a relationship with a bank that a friend or relative banks at gives you a leg up on others who do not have such a relationship. You should be able to negotiate loan terms that are highly favorable to you based on the prior relationship. Your friends and relatives can give you insight on the type of loan they have and the terms that were negotiated on it. This type of information is useful for you in your negotiations and allows you an opportunity to receive preferential treatment.

You should take note that when choosing to rely on the assistance of a friend or relative in order to secure a bank loan, you should take care not to do anything that might be destructive to their relationship. You should use the relationship as a way to secure a good deal for yourself but not to the detriment to the relationship of your friend or relative.