Does anybody know what the criteria are to determine what would be the interest rate for construction loan? If i want to make a model for a boutique bank to set up interest rate framework/ model for developers for construction loan! ( how should I calculate the rate and how can I get to the rate ? )
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Recourse or Non Recourse? Rate spreads will be pretty different depending on the answer to that.
You can do that and many companies have templates. I can’t tell you off the top of my head what goes into that. However, assuming it’s a brokered deal, much of the rate is driven by the market. If one lender drops it’s rate, other lenders may follow suit, etc. The model goes out the window and the question becomes, are you willing to lend on this project at this lower rate and with what structure on the deal or are you putting your pencil down.
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