#private financing

"A Woman Under the Influence" (1974) starring (and written and directed by) John Cassavetes & Gena Rowland's & Peter Falk

The story follows a woman (Gena Rowlands) whose unusual behavior leads to conflict with her blue-collar husband (Peter Falk) and family.

Lacking studio financing, Cassavetes mortgaged his house and borrowed from family and friends, one of whom was Peter Falk, who liked the screenplay so much he invested $500,000 in the project.

Loan-to-value is a key part of mortgage lending. It can also affect the cost of a private mortgage.

The term may sound complex. The idea is quite simple.

Loan-to-value, or LTV, compares the loan amount with the value of the property. A lower LTV means the borrower has more equity in the home.

This can lower the risk for a lender. A higher LTV can mean more risk.

Understanding LTV can help homeowners make better choices when they need private financing.

What Does Loan-to-Value Mean?

LTV shows how much of a property's value is covered by debt.

For example, imagine a home is worth $800,000. The mortgage is $400,000.

The LTV is 50%.

Now imagine the same home has a mortgage of $600,000. The LTV is 75%.

The second loan has a higher LTV.

The borrower has less equity in the property. This can change the way a lender views the loan.

Why LTV Matters to Lenders

A mortgage is secured by property.

If a borrower cannot repay the loan, the lender may need to sell the property. The lender wants the property to provide enough security for the debt.

A lower LTV gives the lender more protection.

For example, a home worth $800,000 with a $300,000 loan has a lot of equity. There is a larger gap between the property value and the loan.

That gap can help reduce the lender's risk.

A high LTV leaves less room between the loan balance and the property value.

How LTV Can Affect Mortgage Cost

Risk can affect the cost of a private mortgage.

A lower LTV may help a borrower access better loan terms. A higher LTV may lead to a higher rate or other costs.

This is one reason borrowers may see different private mortgage rate options when they compare loans.

The rate is not based on LTV alone.

Lenders may also review the property, location, mortgage position, credit, income, and loan purpose.

Each loan is different.

A Simple LTV Example

Consider a homeowner with a property worth $1 million.

The current mortgage balance is $500,000.

The LTV is 50%.

Now suppose the homeowner wants to borrow another $200,000.

The total debt would become $700,000. The new LTV would be 70%.

The homeowner still has equity. But the lender now has more money at risk.

This may affect the cost of the new loan.

The example shows why the loan amount matters.

Home Value Can Change the LTV

LTV is tied to property value.

If the value of a home rises, the LTV may fall. This can improve the borrower's equity position.

For example, a home may be worth $700,000 with a $350,000 mortgage. The LTV is 50%.

If the home later rises to $800,000 and the mortgage stays at $350,000, the LTV falls to about 44%.

The borrower now has more equity.

A lender may consider this when reviewing a new loan.

An Appraisal May Be Needed

A lender needs a reliable property value when calculating LTV.

An appraisal can help confirm that value.

The appraiser may review recent sales in the area. They may also consider the property's size, condition, location, and type.

The lender may use the appraised value when deciding how much to lend.

A homeowner should not assume that the current market value is the same as the value used by the lender.

A lower appraisal can lead to a higher LTV.

Mortgage Position Also Matters

LTV is not the only risk factor.

Mortgage position is also important.

A first mortgage has the first claim on the property. A second mortgage ranks behind the first.

A second mortgage can carry more risk for the lender. This may affect the rate and fees.

The lender will look at the total debt on the property.

This means a borrower should review all registered loans before applying for more funds.

Property Type Can Affect the Loan

Not every property has the same market value or demand.

A standard home in a busy area may be easier to sell. A unique property may have fewer buyers.

Lenders may review:

Detached homes

Condos

Townhomes

Rental properties

Land

Commercial properties

The property type can affect the lender's view of risk.

This can affect the loan terms even when the LTV is the same.

Location Can Make a Difference

Location is another factor.

A property in a strong market may be easier to sell. A property in a remote area may have fewer potential buyers.

This can affect the lender's risk.

Two properties may have the same value and LTV. Yet the loan terms may still differ because the locations are not the same.

Local market demand can play a role in the final decision.

Can Borrowers Improve Their LTV?

Borrowers may be able to improve their LTV.

One option is to borrow less.

Another option is to pay down existing mortgage debt. This increases the amount of equity in the property.

A higher down payment can also reduce LTV when buying a property.

These steps may help create a stronger loan position.

However, borrowers should not use all their cash just to lower LTV. They should keep enough money for emergencies and other costs.

Look at the Full Cost

A lower rate is useful. But it should not be the only factor.

Borrowers should also review:

Lender fees

Legal fees

Appraisal costs

Loan term

Payment rules

Renewal terms

A loan with a lower rate may still cost more if it has high fees.

The full cost gives a better view of the deal.

Have a Clear Repayment Plan

Private mortgages are often used for short-term needs.

A borrower should know how the loan will be repaid before signing.

The plan may involve refinancing, selling a property, paying down debt, or moving to a bank mortgage.

A clear plan can reduce risk.

It also helps the borrower choose a loan term that fits the expected timeline.

Conclusion

Loan-to-value can have a major effect on private mortgage costs. A lower LTV often gives a lender more security. A higher LTV can increase risk and may affect the rate or other loan terms.

But LTV is only one part of the review. Property value, location, mortgage position, property type, and repayment plans can also matter.

Homeowners should compare the full cost of each loan. They should also make sure the payment fits their budget.

Today many people don’t know what is financial intermediary is and what its functions are. The financial intermediaries are the institutions specialized in mediating between two figures involved in a financing process, taking charge of establishing the relationship between the natural or legal person who needs the funds.

These are institutions that offer operations management services, credits, private financing, investment, and a lot more services. A financial institution is dedicated to channeling the savings of those who have funds toward financing those who request it.

Types of financial intermediary and their services:

There are two types of financial intermediaries:

Banking intermediaries - Here you can find private banks, credit unions, and savings banks. The main offer with which they have credits and loans for those who request private financing.

Non-banking intermediaries - Here there is a wide variety of entities and they will depend on the asset with which they work. Some of the functions carried out by these types of entities are also recurring in banking entities, but, for example, non-bank financing is increasingly taking on a more fundamental role.

In this type of financial institution, you can find - Insurance entities, private pension funds, investment funds, official credit institutes, mortgage credit institutions, and advice, and agencies.

What are the main functions of a financial intermediary?

There are other functions carried out by financial intermediaries apart from the intermediation between the two parties:

 Reduces the risk of assets thanks to the diversification of the investor's portfolio.  Activate the fund market and channel savings toward investment.  Covers financial needs and activates the business fabric, contributing to the growth of companies.

Learn about and analyze market trends in the financing sector:

At the financial institution, they will work to cover the financial needs of our clients, making them obtain the immediate liquidity they need at certain times to be able to face their reality and continue their operations and daily activity.

The financial agents are aware of the needs of clients and liquidity applicants, which is why they work with the financial products that most help small, medium, and large companies and with the financial products that are of most interest to the self-employed. You can learn more about the promissory note discount service, factoring, confirming, and many more. Of course, they make an instant contact service available to all users with our chats, forms, telephone numbers, and emails.

Searching for financing, although it is a great habit to finance your growth strategies and increase your working capital, can be a task that requires time and a great analysis to know what type of financing you need. We have talked about the various sources of financing for each need of your business. From bank loans to factoring, each of these sources is tailored to your capital and operating expense needs.

To find out which of all of them is best suited to what you are looking for, you can turn to a specialist in this type of matter. The most common is the financial intermediary that, as their name suggests, is a link between financial institutions and companies that seek private financing in exchange for interest.

Financial intermediaries are becoming more and more common in the financial sector and there are great advantages to starting to work with one. In this post, we explain what their main tasks are and how the relationship between creditors and creditors works.

What is a financial intermediary?

An intermediary is a moral person who works as a mediator between a person who now wants to invest his money and a company that requires private financing, offering attractive interest rates for investors in exchange for a commission for companies.

The task carried out by financial intermediaries is intended to ensure that the investor is not in direct contact with the companies that require the investment. On the commission they receive, the financial intermediaries calculate it on the intermediation margin, which is measured based on the difference between the interest rate they offer to investors and the one they ask for from borrowers.

Characteristics of financial intermediary:

An intermediary serves as a mediator for financial transactions between investors and companies that need financing. They can offer various sources of private financing such as leasing or factoring or credits. There are two types of financial intermediaries: banking and non-banking

Types of financial intermediaries:

There are two types of financial intermediaries: banking and non-banking. Below we explain each of them.

Bank financial intermediaries:

Bank financial intermediaries with private banks and savings banks. They offer traditional financing services through the funds they raise from their clients. These financing can be loans or bank credits. Non-bank financial intermediaries:

Non-bank financial intermediaries have non-bank operations that they carry out through non-monetary assets such as shares, investment funds, and bonds. As their name indicates, they cannot carry out banking and credit activities. Here are the factoring companies, insurers, and trusts, to name a few examples.

Benefits of financial intermediary:

Through a financial intermediary, people who have savings can benefit companies that have growth strategies such as starting to sell their products in new international markets. As we have mentioned before, companies that seek to enter international trade greatly benefit national economies whose GDP depends on this type of activity.