For a refinance transaction, Subordinate loans (also referred to as Junior Loans) are most frequently requested when the primary, senior mortgage is attractive and is better left intact and not combined into a larger refinance transaction. The most common reasons for subordinate financing or use of funds is tenant improvements for lessees by property owners, also referred to as lessors. Purchase money second trust deeds also provided. Other important and allowable uses of funds derived from second trust deeds include:
- Partnership buy-out or dissolution
- Property/state/federal tax obligation
- Funds used for alternative investment (including deposit money for new property acquisition)
- General property improvement before a sale
Typical terms include:
ASSET TYPES: Office/Medical, Industrial, Multi Residential, Land, Industrial, Retail, Special Use.
LOAN TO VALUE: Debtcraft investor’s are interested in making solid loans that serve the needs of its clientele. Depending on the asset class, combined loan to value (CLTV) can be as low as 50% for raw land and as high as 70% for high quality, DCR multi residential properties.
RATES: Without calculating APR, simple interest rates can range between 9.000% to 15.000% depending on assert location and quality.
LOAN AMOUNTS: Loan amounts provided may be as little as $50,000 (usually used as a deposit for a purchase up-leg) and as high as $1,000,000.00 and everything in between.
REQUIRED DOCUMENTATION: Necessary papers and exhibits include copy of the Senior Promissory Note and Mortgage Statement, Evidence of Hazard Insurance, Current income and Expenses Statement and Personal Financial Statement.
LOAN TERMS: 6-60 months
AREAS OF OPERATION: Junior debt requests are primarily funded in California, however, Debtcraft is very active in other states where loan amounts exceed $500,000.00