#Gap loan full#

These gap funds are normally evidenced by a promissory note secured by a junior mortgage subject and subordinate in all respects to the permanent loan documentation.

In this agreement, a special provision is inserted providing that if the permanent lender's rent-roll holdback is not fulfilled at the time for the permanent closing, the construction lender agrees to disburse, at a concurrent closing date, funds equal to the amount withheld by the permanent lender pursuant to its commitment. Where the gap lender has agreed prior to construction to make the gap loan, the document that ties together the construction loan, the gap loan, and the permanent loan is the buy-sell agreement. In this case, the gap lender is often the construction lender. This is normal in a situation involving a permanent “floor-ceiling loan,” where the borrower does not meet a rent-roll requirement, and the first mortgagee funds only a floor amount, agreeing to fund the balance in the event the rent-roll requirement is met within a stated period.

#Gap loan full#

More specifically, gap financing is subordinated temporary financing paid off when the first mortgagee disburses the full amount due under the first mortgage loan. It is an interim loan given to finance the difference between the floor loan and the maximum permanent loan as committed. Gap Financing is a term mostly associated with mortgage loans or property loans such as a bridge loan. ( Learn how and when to remove this template message) ( December 2010) ( Learn how and when to remove this template message) You may improve this article, discuss the issue on the talk page, or create a new article, as appropriate. The examples and perspective in this article may not represent a worldwide view of the subject.