Hard Money Basics
Interest-Only Loans, Explained
No jargon and no sales pitch. This is how we explain it at the Averlend desk, with the math that matters.
Hard Money Basics
The short version, then the substance.
Key Takeaways
- How the payment works
- Why investors prefer it
- The discipline it requires
How the payment works. On an interest-only loan you pay just the interest each month and the principal stays level until the exit. On a $200,000 note at a 12% annual rate, that is $2,000 a month, with the $200,000 retired when you sell or refinance.
Why investors prefer it. Lower monthly carry while the project is eating cash. Every dollar not going to principal is a dollar funding the rehab, the marketing, or the next deal. The principal gets paid by the exit, which is how the deal was designed anyway.
The discipline it requires. Interest-only means the balance never shrinks on its own. The exit is not optional. Mark the calendar, work the plan, and treat month nine as the deadline even when the note says twelve.
The South Texas angle. Averlend underwrites this every week in San Antonio and across Bexar County. If you are working a deal in Alamo Heights or anywhere else in the metro, the theory above comes with a local desk attached: see our San Antonio lending page or send the deal directly.
Questions
Quick answers from the Averlend desk.
The Averlend Promise
Reading is free. So is a deal analysis.
Send the collateral, the numbers, and the exit. An Averlend rep will reach out ASAP, same business day.