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Hard Money Loan Positions Many hard money lenders will only lend on the first mortgage (in the industry this is known as being in the 1st-lien position). If the borrower should default on the loan, the hard money lender is the first creditor to be paid when the property is sold. Some hard money lenders will subordinate to another 1st lien position loan; these loans are known as HELOC loans or second lien position loans. This is a riskier position for the lender as they are the last creditor to recieve remuneration. Loan to Value on Hard Money Loans Hard money lenders structure loans based on loan to value (LTV). The LTV for most hard money loans will not exceed 75% of the value of the property. For the purposes of determine an LTV, the word "value" is defined as 'today's purchase price'. This the amount that a lender could reasonably expect to realize from the sale of the property in the event that the loan defaults and the property must be sold in a 1-4 months' time.
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