From the course: Structuring a Construction Loan
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Terms and definitions
From the course: Structuring a Construction Loan
Terms and definitions
- [Narrator] The following additional terms are relevant to this course, so let's walk through these together. As I mentioned in Construction Finance Fundamentals, when we were discussing key terms, different jurisdictions and regions around the world will use different terminology. My hope is that by defining the terms upfront, as I use the terms throughout the course, you will understand the meaning they play in your environment. First, LTC, or loan-to-cost, is the loan amount, expressed as a percentage of the total development budget of eligible costs. Eligible or ineligible costs. Not all costs in the development budget are deemed part of the budget from a lender's perspective. The lender will determine the loan-to-cost based on these elements of the development budget it deems eligible to lend against. LTV, or loan-to-value, is the loan amount, expressed as a percentage of the total asset value. The LTV may represent the loan amount relative to the purchase price, to the…
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