Luxury Assets Financing
Hard money lending is a form of short-term, asset-based financing primarily used in real estate. Unlike traditional loans, which focus on credit history, hard money loans are secured by the property’s value. These loans are popular with real estate investors due to their quick approvals and flexible terms but come with higher interest rates (usually between 9% and 14%). They are typically used for projects lasting a few months to a few years.
What is Hard money Lending - Bridge Loans
Hard money lending is a form of short-term, asset-based financing primarily used in real estate. Unlike traditional loans, which focus on credit history, hard money loans are secured by the property’s value. These loans are popular with real estate investors due to their quick approvals and flexible terms but come with higher interest rates (usually between 9% and 14%). They are typically used for projects lasting a few months to a few years.
What is Hard money Lending - Bridge Loans?
- Fast Approval and Funding: : Use yoHard money loans can be approved and funded much quicker than traditional loans, often within days, making them ideal for time-sensitive real estate deals.
- Flexible Terms: Lenders offer more flexibility in structuring loan terms compared to conventional lenders, allowing for customized solutions.
- Less Focus on Credit: Loan approval is primarily based on the value of the property used as collateral, not the borrower's credit score or financial history.
- Opportunity for Investors: Real estate investors often use hard money loans for short-term projects like fix-and-flip or bridge loans, which traditional lenders may not finance due to the project's speculative nature.
- Collateral-Based: As long as the property has sufficient value, hard money lenders are often willing to take on higher-risk borrowers or properties that traditional banks may avoid.
These advantages make hard money loans attractive for borrowers needing quick access to capital, those with less-than-ideal credit, and those with unconventional projects.
What Loan To Value or LTV does Global will lend up to
Loan-to-Value (LTV) ratio is a key concept in hard money lending. It represents the ratio of the loan amount to the appraised value of the property being used as collateral. In hard money loans, the LTV typically ranges from 50% to 70%, meaning the lender will provide a loan amount between 50% to 70% of the property’s value.
For example:
- If a property is valued at $200,000 and the lender offers a 60% LTV, the maximum loan amount would be $120,000 (60% of $200,000).
This lower LTV ensures the lender has a significant equity cushion, reducing their risk if the borrower defaults or the property value declines. The borrower, on the other hand, must provide more equity or additional funding to cover the remainder of the purchase or project costs.
Hard Money Lending Process:
- Application: : Submit your loan request with basic property details and desired loan amount.
- Property Evaluation: The lender assesses the property's value to determine the Loan-to-Value (LTV) ratio, which is typically between 50% and 70%.
- Approval: After the property evaluation, you receive fast approval, often within days, based on the property’s value, not your credit.
- Loan Terms: Customized terms are offered, with flexible repayment schedules and higher interest rates than traditional loans.
- Funding: Once terms are agreed upon, funding is disbursed quickly, allowing you to move forward with your real estate project.
This process is ideal for investors needing quick, short-term funding with minimal paperwork.
