Interest Rates

Weighted Average Interest Costs

Coupled with the lower funding cost of a typical 65% loan-to-valuation ratio first mortgage loan, the weighted average interest cost of the total finance package is very affordable to the borrower and is less costly (and hassle-free) than a profit share arrangement with a partner. An example of the weighted average cost of the funding for a loan of $1.6 million, with a total loan to valuation ratio of 80%, on a property valued at $2 million, is as follows:


Loan to Value

Loan Amount


Interest per annum

1st Mortgage





2nd Mortgage

top 15%




 Totals 80% $1,600,000



The returns to the lender are commensurate with the risk taken at the high loan-to-valuation ratio and second ranking priority in recovering the loan principal.