Private Lending Glossary

Plain-English definitions of terms you’ll see in private and hard money lending.

The estimated value of a property once planned renovations are complete. Often used to size rehab loans.

Paying a loan down over time with scheduled payments of principal and interest.

A larger final payment that repays the remaining loan balance at maturity.

Short-term financing that “bridges” the gap until permanent financing, a sale or another event.

Replacing an existing loan with a larger one and receiving the difference in cash.

An asset, such as real estate or equipment, pledged to secure a loan.

A plan for releasing construction or rehab funds in stages as work is completed.

How a borrower plans to repay a short-term loan, for example by selling or refinancing.

A loan secured mainly by real estate and made by a private lender rather than a bank.

A payment that covers interest only, leaving the principal due at the end of the term.

The loan amount divided by the total project cost.

The loan amount divided by the property’s value.

The date the remaining balance of a loan is due.

Upfront lender charges expressed as a percentage of the loan amount. One point equals 1%.

A written summary of proposed loan terms, provided before final loan documents.

The lender’s review of the borrower, collateral and plan to decide whether and how to lend.

Have a question about a term sheet?

Tell us what you need and a member of our lending team will review your scenario and walk you through your options.