A Fix and Flip Loan, alternatively known as a hard money or bridge loan, represents a specialized form of asset-based financing, wherein the borrower secures funds against the real estate property’s value. At Goldstar Capital Funding, we have cultivated relationships with lenders who specialize in facilitating financing for fix-and-flip property ventures. Reach out to us today via phone or email, and we will swiftly provide you with a competitive rate quote from our network of preferred lenders.
Fix and Flip loans typically come with notably higher interest rates in comparison to conventional residential or commercial property loans and are rarely offered by traditional banks or deposit institutions. Hard money loans share similarities with bridge loans in terms of lending criteria and borrower costs. However, a key distinction lies in the fact that bridge loans usually pertain to commercial or investment properties undergoing transitions, not yet qualifying for traditional financing. On the other hand, hard money loans are associated not only with asset-backed loans featuring high-interest rates but also potentially with distressed financial scenarios, such as mortgage delinquencies or ongoing bankruptcy and foreclosure proceedings.
A significant portion of Fix and Flip mortgages is extended by private investors, often operating within their local communities. Typically, the borrower’s credit score holds minimal importance since the loan’s security lies in the property’s collateral value. Normally, the maximum loan-to-value (LTV) ratio falls within the range of 65-70%. In other words, if the property holds a value of $100,000, the lender would disburse $65,000 to $70,000 against it. This lower LTV ratio serves to safeguard the lender in case the borrower defaults, necessitating foreclosure on the property.
