Sometimes there can be restrictions placed on certain commercial real estate loan programs available through Commercial Lending Corporation, as well as single product lenders, based upon several different factors. These factors are in place to not only guarantee you do not borrow beyond your needs, but also to protect the underwriter in the event of a default on the loan. The most common factor used is the loan to value ratio (LTV). This ratio is a percentage of the maximum amount you are able to borrow against a property’s appraised value. In some cases, the LTV might be calculated using the future appraised value, such as found with new construction or a rehabilitation program.
In addition to the LTV, lenders — like Commercial Lending Corporation — also consider whether they are underwriting a recourse or non-recourse loan. A recourse loan frequently has a higher LTV, because the lender has the right to not only foreclose on the property used as collateral, but also to take legal measures to collect any remaining balance still owed from the company’s other assets. A non-recourse loan limits the lender to only being able to foreclose on the collateral, but often has a lower LTV to ensure their interests in the property are protected, should you default.
Any amount still required about the LTV is your responsibility to supply. For instance, if you are purchasing property and are able to secure a loan with a 75 percent LTV, you would have to cover any remaining balance as your down payment amount. It should be noted that this amount could be less than 25 percent, in cases where you are able to secure a purchase price less than the appraised value.
Tagged: Commercial Lending Corporation