Full Boat

What does Full Boat mean?

Full Boat is a term used by private lenders when they are charging interest for the full amount of a bridge loan, including the construction holdback portion, regardless of whether it is actually utilized and before it is actually utilized.

Do all private lenders charge full boat interest?

No. But many do, so it's important to understand how much you can save if you are able to avoid full boat interest.

At OfferMarket, we believe that borrowers should only be charged for the portion of their loan that has been disbursed. This includes the purchase price component and draw requests that have been processed. We only charge interest on the loan amount that has been disbursed -- this is called "As Disbursed".

Full Boat vs. As Disbursed

Scenario

• Purchase Price: $200,000
• Construction Holdback (rehab loan): $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, full boat costs the borrower twice the amount in interest payments compared to As Disbursed, an extra $2,112.50 that cuts into your profit.