Any user who is looking into this piece must be interested in knowing about every aspect the application in details. So, before you read about the application and its working what is important is to know about peer to peer lending and mortgage lending which are the base concepts of this application. When the user is clear with these concepts it is easier for them to understand about the application and how it functions.
What is mortgage lending?
Mortgage lending is for the real estate market and is done in lieu of mortgage in the form of property. So, basically property or real estate acts as the collateral in this case. The lender gives money to the borrower who is the owner of the property. So, in case the borrower goes bankrupt, the mortgage lender has the first right to the property in proportion of the money lent.
Now that we know about mortgage lending in general and the type of mortgages that are offered and opted for, let us talk about the FAPm which is a mortgage loan app and its working.
How app works?
FAPm is an app that is made for the mortgage lending market in Canada. A simpler explanation is that it is a marketplace for peer to peer lending in the mortgage industry. This app, like any other marketplace, would give the buyers and the sellers a meeting platform for lending and borrowing. It might be confused with other apps that are doing mortgage lending backed by financial institutions. The app and its administrators on the contrary just facilitate mortgage lending. It is actually the common people who do both the lending and the borrowing. So what exactly is the role of the app and its administrators in it? Let’s understand this with a simple flow chart.
Benefits to the borrowers
The borrowers are the ones who are more benefitted by this type of lending compared to the lender. Here are some of the ways in which they are profited.
Applying for the funds is easy: When a borrower wants to apply for loans in the institutions such as banks, they need to be very specific about the details that they provide in the application. It needs to be credible, proper and in detail. However, in peer to peer lending industry, applications can be made comparatively easily. Especially for mobile application based peer to peer lending platform FAPm, uploading a few essential documents is enough for providing information about you to the lenders and the platform. The admins of the platform use these documents to form the basis for judging your credibility along with your credit score.
Speed and Size of funding: In traditional bank loans it used to take a very long time to complete the process of funds being credited. This in no way used to be a funding process that can be called fast.
Suitable interest rates: Interest rates are pretty suitable for the borrowers in the case of peer to peer lending in general. They are on par with bank rates but with lower tensions
Funds are cheaper: Taking loans from mobile application for peer to peer lending gives the results in savings as the interest rates are definitely cheaper for peer to peer loan compared to credit taken from other financial institutions
Less risk of denial of applications: The applications that are submitted by the borrowers for applying for loans are less vulnerable to the situation of denial
All three types of mortgages are available: The borrowers can get first or second mortgage loan or even a loan with a third degree of mortgage without any problems. Usually, in peer to peer lending market, a third mortgage might be difficult to get even if the borrower is ready to pay a higher interest rate
Benefits to the lenders
The lenders in the peer to peer lending market have certain benefits that incentivize them to put money in it. Firstly, the money in this market is less liquid compared to the stock market. This is blessing in disguise because when one might think that liquidity is a boon, it actually many a times results in panic selling and hence loss too!