Analytical Implications of Mortgage Lending Value and Bottom Value

This study concerns the analytical formulation and relative implications of bottom value (BV) and mortgage lending value (MLV) regarding properties where the existing building provides an income during its useful life, leaving thereafter only the land value. The bottom value is equal to the overall property’s market value minus all incomes not collected by the end of the building’s economic life. Furthermore, it considers the income rates for land and buildings differently according to the investment type, while the mortgage lending value considers, instead, a unique rate. The mortgage lending value assessment is conducted under restrictive assumptions on long-term aspects, future marketability, and local market conditions. For the first time, mathematical and appraisal models have been applied to determine the mortgage lending value and the bottom value in particular cases, such as that mentioned above and considered in the present study (existing buildings providing income during their useful life). Some of the indexes introduced in the paper are completely original with respect to the current reference literature.