With a bridge loan, the Loan-to-Value (LTV) is usually calculated on the value after the renovation work . This is also called the future value or the value after renovation (after-repair value, ARV) .
The idea is that the bridge loan is provided based on the expected return of the real estate project after the planned renovation or improvements. This means that the financing is set at the value that the property should have after completion of the renovation, which is the potential sales or appraisal value. This provides room for the necessary renovation and its financing.
In some cases, the bank or financier may also choose to use a combination of the current value (for example, the market value before the renovation) and the future value, but the focus is usually on the expected value after the renovation.