Hard Money Question
I recently spoke to a HML who offered me an interest-only, 100%LTV purchase/rebab loan at 18% for 6 months. How is the interest payment calculated? Is it 18% per month or 18% divided over 6 months.
At 18%, interest only, you'd pay 1.5% (18/12) per month...so on $100,000 borrowed, you'd pay $1500 per month.
The loan may have an early payoff penalty, so as to require a full year's interest, but if it's straight interest only, with no early payoff penalty, it's just 1.5% per month.
It's very important that you get all details of exactly how the lender will structure the deal before you agree to it.
Is the interest rate always applied per annum or could be divided by 6 months (18/6)?
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All of them I've done, have been per annum, with a one year balloon. 18% seems to be a bit high. The HML I've been using charges like 15% the first 6 months, then 18% thereafter.
100% LTV?
Check the other costs involved. If it makes sense, grab it. Don't fret over the interest rate too much.
WOW! I missed the 100% LTV completely! That does change the equation a little. That's VERY unusual for one to do that. Typically, it's 60-70% of LTV.
Thanks everyone! Very helpful.
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can you give inof on this HML. i am just curious about, because i am looking for some. **Please See My Profile**
thanks for any info.
100% is very good. Some of the other guys seem to be suprised. A lot of times hard money lenders will lend 65-70 percent of the AFTER REPAIR VALUE...no PPP. Interest I have seen ranges from 12-18%.
Just what I have come across.