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 bridge loan that is actually disbursed 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 if you are able to negotiate As Disbursed 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

• Construction Holdback (rehab loan component): $100,000
• Interest Rate: 8.45%
• Loan Term: 6 months
• Draw 1: $50,000 after month 2
• Draw 2: $50,000 after month 4

Example: Full Boat

If you are being charged full boat, you will be charged 8.45% interest on the construction holdback starting on day 1. So after 6 months, you will have paid $4,225 in interest on the construction loan component. That's $704.17 per month.

Example: As Disbursed

If you are being charged as disbursed, you will have paid $2,112.50 in interest in the construction loan component. That's $1,408.33 interest for Draw 1 and $704.17 interest for Draw 2.

Example: Summary

In this example, As Disbursed saves the borrower $2,112.50 compared to Full Boat. That's a 50% reduction in interest payments associated with the construction portion of the bridge loan!