BOLLARDCommercial Capital

05Calculator

Bridge and construction carry

Short-term money is priced in points and carried in months. This models the draw curve, the interest that accrues on it, and what the whole thing costs annualised — which is usually the number that changes minds.

  • Total carry to maturity
  • Interest reserve needed
  • All-in cost as a percentage
  • Effective annualised cost

Illustrative only. Bollard is a fictional business built as a website demonstration — the figures below are worked examples, not an offer, a quote or a rate sheet.

Your figures

All-in cost of the money

—

interest, points, exit fee and costs

Interest reserve needed

—

if the carry is funded inside the loan

Cost as a share of the loan

—

over the whole term

Effective annualised cost

—

on the average balance outstanding

Draw curve

What is outstanding, month by month

OutstandingCumulative interest

Loan balance drawn over the term with cumulative interest accruing against it

Cost breakdown

Where the money goes

    Month by month

    Carry schedule

    MonthOutstandingInterestCumulative

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    Assumptions and limits

    What this model does and does not do

    Interest accrues monthly on the balance outstanding, which is the point of modelling a draw curve at all: a construction loan that funds evenly costs roughly half what the same loan fully funded on day one would cost.

    Origination is charged on the full commitment at closing. Some lenders charge on funded amounts instead, which is worth asking about — it is a real difference on a construction facility.

    The effective annualised figure divides all-in cost by the average balance and annualises it. It is a fair way to compare a twelve-month bridge with a six-month one; it is not an APR and should not be read as one.

    Extension fees, unused-line fees, inspection fees and the cost of a slipped take-out are not modelled. Budget for at least one of them.

    Deal intake

    Have someone check your numbers

    Send the scenario and a real desk would come back with the two or three structures worth pricing.

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    The other five

    01504 stackWhat does a three-part capital stack actually cost me each month?02Loan sizingHow large a loan does this property actually support, and which test stops it?03AmortisationWhat is left on the day this loan matures?04Lease vs ownIs buying the building better than renewing the lease?06RefinanceDoes this refinance pay back before I sell or mature?

    Next bay

    Model it, then let someone check it

    Calculators answer the arithmetic. What they cannot tell you is whether a lender will believe your net operating income, or which programme your equity actually supports.

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