Three lenders all say they go to 75%. They all mean different things.

Posted in Resume Builders
Three lenders all say they go to 75%. They all mean different things.

“We can go up to 75% leverage”. It’s unfortunate, because potential commercial mortgage borrowers probably only hear it one way, when the lender relaying this information may actually mean one of three different things. 75% LTCWhen a private lender tells you that they can lend up to “75% leverage”, they most likely are referring to Loan to Cost (“LTC”). Therefore, the initial bridge lender targets an As-Stabilized LTV (and probably also an As-Stabilized Debt Yield) in their loan sizing. Clear it up with one questionNext time you ask a lender about their leverage constraints and they give you an answer like “We can provide up to 75% leverage”, you can ask a simple follow-up clarification to avoid wasting time later: “Do you mean 75% LTV or 75% LTC?” It may turn out that they can provide 75% LTV for stabilized properties, and 75% LTC for value-add projects.

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