The loan-to-value (LTV) ratio for a bridge loan can vary depending on the lender and the specific circumstances of the loan. Generally, bridge loans have higher LTV ratios than traditional loans, as they are typically used to bridge the gap between the sale of one property and the purchase of another, which can result in a temporary shortage of funds.
The LTV ratio represents the amount of the loan compared to the appraised value of the property. For example, if the appraised value of a property is $500,000 and the borrower is seeking a bridge loan of $400,000, the LTV ratio would be 80% ($400,000 divided by $500,000).
Typically, bridge lenders may offer LTV ratios of up to 80% to 90%, depending on the property and borrower’s qualifications. However, it is essential to note that higher LTV ratios typically come with higher interest rates and more stringent repayment terms. Additionally, lenders may require a significant amount of collateral or equity in the property to offset the risk of default.