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.

Comments(8)

  • JohnMerchant20th April, 2004

    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.

  • cdub0220th April, 2004

    Is the interest rate always applied per annum or could be divided by 6 months (18/6)?
    [addsig]

  • jam20020th April, 2004

    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.

  • TheShortSalePro20th April, 2004

    100% LTV?

    Check the other costs involved. If it makes sense, grab it. Don't fret over the interest rate too much.

  • jam20020th April, 2004

    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.

  • cdub0220th April, 2004

    Thanks everyone! Very helpful.
    [addsig]

  • hkadreb3rd May, 2004

    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.

  • jjetts43rd May, 2004

    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.

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