Richard Thornton has applied for a home equity loan from Capital Two Bank.The bank on its part has estimated the market value of Richard's property at $750,000.If the amount of existing mortgage loan on the property is $500,000 and Capital Two as a policy lends only up to 70 percent of the borrowing base,what is the maximum amount of loan will Richard get?

Question

Quizplus · Accepted Answer

The borrowing base is the value of the property minus the existing mortgage loan, which is $750,000 - $500,000 = $250,000. 
Capital Two Bank only lends up to 70% of the borrowing base, so the maximum loan amount Richard can get is 70% of $250,000, which is $175,000. Therefore, the answer is choice C.

Richard Thornton Has Applied for a Home Equity Loan from Capital