What is ‘Tandem Loan’
Two loans taken out on one asset, which is usually a house; the secondary loan is normally added to a primary loan. A tandem loan may also refer to a lending facility that enables businesses to bridge the gap between commercial loans and other sources of funding, with loan proceeds used for working capital, acquisitions, or land and equipment. They could provide monetary assistance to builders and developers of nonprofit public housing.
Explaining ‘Tandem Loan’
A specific type of tandem loan is the Federal Housing Administration’s FHA/VA Tandem Loan, which is only available to veterans for financing single-family loans. Tandem loans should not be confused with a tandem plan, which refers to a mortgage purchase program involving Fannie Mae and Ginnie Mae.
Further Reading
- A macroprudential approach to address liquidity risk with the loan-to-deposit ratio – www.tandfonline.com [PDF]
- Real Estate Finance: The Discount Point System and its Effect on Federally Insured Home Loans – heinonline.org [PDF]
- Moving in tandem: bank provisioning in emerging market economies – papers.ssrn.com [PDF]
- Re-engineering agriculture for enhanced performance through financing – papers.ssrn.com [PDF]
- The challenge of financing higher education and the role of student loans scheme: an analysis of the student loan trust fund (SLTF) in Ghana – link.springer.com [PDF]
