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As Disbursed
What does As Disbursed mean?
As Disbursed is a term used by private lenders when they are only charging interest for the amount of a fix and flip loan that has actually been disbursed to the borrower. This means undrawn construction holdback funds will not accrue interest until a draw has been requested and the funds have been wired to the borrower.
Other terms for As Disbursed
As Disbursed is also referred to as "Non-Dutch" and "New York Interest".
As Disbursed is a more cost effective arrangement than Full Boat because interest is not charged on the construction holdback portion of the loan until draw requests have been processed. Then and only then is the borrower charged interest on the amount actually drawn from the construction loan rehab budget.
Do all private lenders charge interest As Disbursed?
No. Most private lenders charge Full Boat, so it's important to understand how much you can save with As Disbursed interest accrual instead of Full Boat.
At OfferMarket, we believe that borrowers should only be charged for the portion of their loan that has been disbursed. That is why we only charge interest on an As Disbursed basis.
As Disbursed vs. Full Boat
Scenario
- Initial advance: $100,000
- Construction holdback: $50,000
- Total loan amount: $150,000
- Interest Rate: 12%
- Loan Term: 12 months
- Draw 1: $25,000 after month 2
- Draw 2: $25,000 after month 4
Example: As Disbursed
If you are being charged as disbursed, you will only be charged interest for what has been disbursed by the lender (initial advance and subsequent draws on your construction holdback):
| Month | Amount disbursed | Interest cost |
|---|---|---|
| 1 | $100,000 | $1,000 |
| 2 | $100,000 | $1,000 |
| 3 | $125,000 | $1,250 |
| 4 | $125,000 | $1,250 |
| 5 | $150,000 | $1,500 |
| 6 | $150,000 | $1,500 |
| TOTAL: | $150,000 | $7,500 |
Example: Full Boat
If you are being charged full boat, you will be charged 12% interest on the total loan amount starting on day 1, even though you will not have received the $50,000 construction holdback until your draw requests after month 2 and month 4. So after 6 months, you will have paid $9,000 in interest. That's $1,500 per month.
| Month | Amount disbursed | Interest cost |
|---|---|---|
| 1 | $100,000 | $1,500 |
| 2 | $100,000 | $1,500 |
| 3 | $125,000 | $1,500 |
| 4 | $125,000 | $1,500 |
| 5 | $150,000 | $1,500 |
| 6 | $150,000 | $1,500 |
| TOTAL: | $150,000 | $9,000 |
Example: Summary
In this example, As Disbursed saves you $1,500 in interest compared to Full Boat. These savings go straight to your bottom line.
Get an As Disbursed Fix and Flip loans from OfferMarket
OfferMarket is a real estate investing platform. Our private lending division, OfferMarket Capital LLC, is a leading private lender for real estate investors and we specialize in Fix and Flip loans for 1-4 unit residential properties. Our mission is to help you build wealth through real estate and we would love the opportunity to partner with you on your next transaction.
Thousands of real estate investors get value from OfferMarket every month. Membership is entirely free and includes the following benefits:
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