Alaska Bridge Loans
Alaska has 10 private money bridge lenders in the state. In this state, the average amount for loans is $287,500. Interest rates for private loans average about 11.2%. The typical term offered for notes is 20 months. The mean origination percentage added to loans is 2.6%. The typical loan-to-value (LTV) offered for loans in Alaska is 73%.
Loan Example 1
Dolly closes on a $250,000 rehab project in Eagle River, AK, using a hard money bridge loan from Top Notch Funding Group . The loan to value (LTV) on the note is 65%. This means that Dolly will have to bring 35% of the purchase price to the closing and the principle amount will be $162,500 on the note. The loan is interest-only, with monthly payments, and is for 6 months at 11% interest with 1 points to be paid when the deal closes.
In addition to paying the $1,625 origination fee, Dolly will also need to fund $87,500 of the purchase with her own cash, or 35% of the purchase price. Top Notch Funding Group will collect $1,490 in monthly interest from the Dolly . This is computed by taking the total loan amount of $162,500, multiplying by the 11% interest rate, and then dividing that amount by 12. At the end of the note, she sells the renovated house for $350,000. After subtracting the $8,938 in interest payments ($1,490 multiplied by 6 months), the $1,625 origination fee, the $162,500 principle amount on the note, and the $87,500 she contributed to the closing, she will make a total profit of $89,438 ($350,000 sales price minus $260,563 in total costs). This amount would be reduced by any renovation costs paid by Dolly .
Loan Example 2
Carlos locates a duplex in Juneau, AK to rehab and resell. Because he does not have enough cash to buy the property outright, he takes a hard money bridge loan from West Shore Finance Company with the following parameters:
$290,000 sales price
85% loan to value (LTV)
18 month term
9% rate of interest
5% origination fee
After the rehab project is complete, if Carlos sells the house for $420,500, the numbers would be the following:
$420,500 sales price
- $246,500 note principle (85% LTV)
- $43,500 cash paid at closing (15% on 85% LTV)
- $12,325 origination fee (5% of the $246,500 principle amount)
- $33,278 total interest paid (18 months x 9% interest)
-----------------------
= $84,898 gross profit (doesn't include taxes or renovation costs)
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