Mortgage Lending for Owner Occupied
ITV means Investment to Value. LTV means Loan to Value.
Note that the ITV refers to the “as is” value, not what the property could be worth if fixed up. Always insist on an appraisal by a licensed appraiser, preferably of your choosing. The property could be being bought for less than the appraised value.
Example: A house is worth $100,000.
The mortgage is for $80,000. The LTV is 80%.
You buy this mortgage for $70,000. Your ITV is 70%.
We recommend that the buyer always has at least 5% of their own cash in the deal.
You may just want to buy part of the mortgage and thus reduce your investment and risk.
Owner/Occupier Borrower buying Single Family Home or Condo:
| Credit Rating | Investment to Value | Desired Yield to you |
|---|---|---|
| A+ No 30 day late last 12 mths FICO=680+ | 80% | 11.70% |
| 70-79% | 11.20% | |
| 60-69% | 10.70% | |
| A 1 30 day late last 12 mths. FICO=660-680 | 80% | 11.80% |
| 70-79% | 11.30% | |
| 60-69% | 10.80% | |
| A- 2 30 day late last 12 mths. FICO= 640-660 | 80% | 11.90% |
| 70-79% | 11.40% | |
| 60-69% | 10.90% | |
| B+ 3 30 day late last 12 mths. FICO=620=640 | 75% | 12.00% |
| 65-74% | 11.50% | |
| 55-64% | 11.00% | |
| B 4 30 day late last 12 mths. FICO= 600-620 | 75% | 12.20% |
| 65-74% | 11.70% | |
| 55-64% | 11.20% | |
| C 60 day lates last 12 mths. FICO=520-600 | 70% | 12.40% |
| 60-69% | 11.90% | |
| 50-69% | 11.40% |
As you can see, the lower the cash investment and the lower the credit score, the worse the credit class of the borrower and the higher the yield you should expect.
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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