What Is Loan-To-Value Ratio?

It is widely known that the first option that many borrowers go for is a traditional bank loan. But sometimes, their loan requests get rejected. That can be due to low income, bad debt or even employment status.

In some cases, the loan application being rejected is not the problem. Instead, the process of acquiring funds taking too long is the issue. That is mostly the case when it comes to real estate. There is no time to apply for traditional bank loans and wait till funds are processed. You need to act fast and close your deal in the real estate business. That is when borrowers approach private money lenders for their financing needs.

Let’s look into the background of hard money loans first. The basis of hard money is that it keeps an asset as collateral to lend funds. Therefore, it doesn’t depend on your credit score or income status. It depends primarily on the value of the collateral.

Once you approach a hard money lender with your request, the Loan-to-Value ratio or simply LTV will be calculated. The value is obtained by taking the loan value as a fraction of the value of the collateral. The larger the percentage, the riskier it is for the lender. Most hard money lenders are comfortable with going up to 70% LTV in many real estate investments. That also means that higher the LTV, the more difficult it gets to find a lender.

Looking for a Private Money Lender willing to take a risk and provide you with that additional funding needed?

Davidson Private Money Lenders, BridgeWell Capital, is who you need to approach. Call now to get funded with the highest LTV and lowest interest rates. Davidson Private Money Lenders, BridgeWell Capital, can even give you Project Consulting regarding your investments.