Mortgage Lending for Commercial, Multi-Family or Vacant Land
ITV means Investment to Value. LTV means Loan to Value.
Commercial loans are riskier than loans on single family homes. We are much more conservative with commercial loans and vacant land loans and the yields must be higher. Multi family is safer than offices, retail or factories. Vacant land is the riskiest of all.
Remember you are buying an EXISTING mortgage. The discount you get should reflect the terms of that loan. For example, the original mortgage may have a 10% per year interest rate. But if you pay less than the face value of the mortgage then your yield improves.
Or you may just want to buy part of the mortgage.
Borrower for Commercial/Multi-Family/Vacant Land
| Credit Rating | Investment to Value | Desired Yield to you |
|---|---|---|
| A+ No 30 day late last 12 mths FICO=680+ | 65-75% | 11.50% |
| 50-64% | 11.00% | |
| A 1 30 day late last 12 mths. FICO=660-680 | 65-75% | 12.50% |
| 50-64% | 12.00% | |
| A- 2 30 day late last 12 mths. FICO= 640-660 | 65-75% | 12.75% |
| 50-64% | 12.25% | |
| B+ 3 30 day late last 12 mths. FICO=620=640 | 60-70% | 13.00% |
| 50-59% | 12.50% | |
| B 4 30 day late last 12 mths. FICO= 600-620 | 60-65% | 14.00% |
| 50-59% | 13.50% | |
| C 60 day lates last 12 mths. FICO=520-600 | 50-60% | 15.00% |
| 40-49% | 14.50% |
Remember, the above are guides only. Never let anyone tell you how to invest your money. As a practical matter, if someone has put up 10% of their own money to buy your property it is very unlikely the loan will default, although there are exceptions.
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