The bank uses a collateral value for their security. This is usually equal to 70% of the mandatory sales value. Financing up to the collateral value is less risky for banks. Do you want to buy office space, retail space, warehouse, industrial hall or other types of BOG and does the bank only want to finance the value of the collateral? Then view the following example calculations to determine your own investment:
Appraised value: 200,000
Foreclosure value: 0.85 * 200,000 = 170,000
Mortgage value: 0.7 * 170,000 = 119,000
In other words, the mortgage lending value is 119000/200000 x 100, usually 59.5%.
You must finance 40.5 yourself. Keep in mind that banks usually finance above the collateral value.
