What’s so special about about Fractional financing?
To understand the benefits of Fractional’s LLC loans let’s dive into how mortgage financing usually works. Traditionally, there are two routes for securing a loan:
Conventional Loans
These are government backed loans (ie: Fannie Mae, Freddie Mac loans) with lower interest rates (because they are government backed). They can be pretty sweet loan deals, but the caveat is that owners have to personally take ownership for the entirety of the debt.
This is a pretty significant drawback taking on the entirety of the debt even if you only own a portion of equity. For example, even though you only own 25% of the property, you are still responsible for 100% of the debt.
LLC Loans
Another loan option is an LLC loan. Interest rates will be significantly higher (6%+), but not all participants are responsible for the entirety of the debt. However, a lot of lenders require a personal guarantor for these loans. This means that someone in the group has to take on the risk of assuming 100% responsibility of the debt.
Fractional LLC Loans
Fractional’s exclusive partnerships allow groups to acquire LLC loans for as low as 4.125%, with no personal guarantor needed from any co-owner. Our partnerships also make the loan approval process easy and hassle-free.
But we can also adapt financing to suite your group needs
You can still acquire a conventional mortgage such as an investment home loan or second home loan, and are welcome to bring your own conventional lender or find a conventional lender through Fractional’s network.
Traditionally as mentioned, when you decide to use a conventional lender, co-borrowers on the mortgage are wholly responsible for the entirety of the debt. However, we can also work with your group to adapt debt responsibility.
Our co-ownership legal agreement allows debt-takers to be compensated
Certain investor groups will take out conventional loans by selecting a group member to take responsibility for the debt in exchange for more equity or other form of compensation. We can help accommodate these arrangements in our legal agreements. Owners can choose to quick claim the title to an LLC at their own risk.