Line Fee | (A lenders cost to guarantee the funds)
A line fee is charged on the facility limit at all times during the loan term, not on what you actually use. It’s important to know that construction financiers are inclined to load up on the line fee, as they can make twice as much from a line fee versus an interest rate.
As illustrated in the graph, nearly 50% of your loan term is being charged a line fee on the full loan amount.
Needless to say, when it comes to construction loans, our preference is lenders who don’t charge a line fee wherever possible. Note that, however, all lenders charge line fees for loans above $25 million.
When it comes to construction and development lending – thee can be bank – 2nd tier – specialist and private lenders. Not all private lenders are created equal!
