Real Estate Term of the Day – End Loan

An End Loan is a specific type of long-term loan than a borrower uses to pay off a short term loan, such as a construction loan. This loan might be a combined with a construction loan, so that the borrower only has to deal with one lender, file only one credit application, and pay only one set of settlement costs. However, the one disadvantage to combining your loans and working with one lender is that you do not get the chance to shop around for the best deal after the construction loan financing.

End loans are most often seen in conjunction with construction loans, which borrowers take out to fund the building of a project. Construction loans are often available before other forms of payment to a borrower, but they also come with higher interest rates as lenders consider them more risky than traditional loans. By taking out an end loan to finance the construction loan, a borrower can save money based on the difference in interest rates between the two loans. This can also help with the strict stipulations often associated with construction loans, such as having to pay off an entire balance by the project’s completion orĀ  payments mandated on the interest.