Loan Project Types

At Gap Investors are actively seeking investment for a diverse portfolio of projects, including home mortgage loans, commercial loans, construction loans, bridge loans, hard money loans, and interest-only loans. Each loan type has its own interest rate range and risk profile.

Home Mortgage Loans

You can buy a home in Costa Rica with 60% down payment and Gap Investors can help find a lender to finance the balance. Home prices in Costa Rica are lower than North America for equivalent homes, so it's not unusual for investors and expats to have 60% or more to put in a down payment, but they do not have access to traditional bank mortgages because of a lack of local Costa Rican credit requirements.

Find a home in Costa Rica that's right for you at Gap Real Estate!

Commercial Loans

Commercial lenders include commercial banks, mutual companies, private lending institutions, hard money lenders and other financial groups. These lenders typically have widely varying standards on which they base their loan criteria and evaluate potential borrowers-- but are often focused exclusively on the private market and have more lenient financial qualifications than banks.

Commercial lenders specialize in hard money and bridge loans, often those that close quickly, in as little as two weeks. The commercial loan industry is most often accessed through brokers, who provide an evaluation of a borrower and then recommend the loan to a number of different commercial lenders whom they feel will be most likely to fund the borrower's request. Going through a broker rather than directly through a lender may cause longer wait times for loan financing and more up-front fees, however they can greatly facilitate the process and come up with innovative and unique ways to overcome obstacles that the borrower may not be able to access on their own. Commercial lenders weigh the type, quality, and equity of the hard collateral very heavily. They provide the borrower with the greatest flexibility but also the highest rates when compared with bank loans. Many commercial loans are bridge loans where a higher rate is a good trade off for the speed with which the loan is delivered and the flexibility of the finance terms behind it.

Construction Loans

In the broadest sense of the term, a construction loan is any loan where the proceeds are used to finance construction of some kind. In the Financial Services industry however, the term is used to describe a genre of loans designed for construction and containing features such as interest reserves, where repayment ability may be based on something that can only occur when the project is built. Thus the defining features of these loans are special monitoring and guidelines above normal loan guidelines to ensure that the project is completed so that repayment can begin to take place.

Bridge Loans

A bridge loan is interim financing for an individual or business until permanent or the next stage of financing can be obtained. Money from the new financing is generally used to "take out" (i.e. to pay back) the bridge loan, as well as other capitalization needs.

Bridge loans are typically more expensive than conventional financing to compensate for the additional risk of the loan. Bridge loans typically have a higher interest rate, points and other costs that are amortized over a shorter period, and various fees and other "sweeteners" (such as equity participation by the lender in some loans). The lender also may require cross-collateralization and a lower loan-to-value ratio. On the other hand they are typically arranged quickly with relatively little documentation.

Hard Money Loans

A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by the value of a parcel of real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or other deposit institution. Hard money is similar to a bridge loan, which usually has similar criteria for lending as well as cost to the borrowers. The primary difference is that a bridge loan often refers to a commercial property or investment property that may be in transition and does not yet qualify for traditional financing, whereas hard money often refers to not only an asset-based loan with a high interest rate, but possibly a distressed financial situation, such as arrears on the existing mortgage, or where bankruptcy and foreclosure proceedings are occurring.

Many hard money mortgages are made by private investors, generally in their local areas. Usually the credit score of the borrower is not important, as the loan is secured by the value of the collateral property. Typically, the maximum loan to value ratio is 60% -- that is, if the property is worth $100,000, the lender would advance $60,000 against it. This low LTV provides added security for the lender, in case the borrower does not pay and they have to foreclose on the property.

Interest-only Loans

An interest-only loan is a loan in which, for a set term, the borrower pays only the interest on the principal balance, with the principal balance unchanged. At the end of the interest-only term the borrower may enter an interest-only mortgage, pay the principal, or (with some lenders) convert the loan to a principal and interest payment (or amortized) loan at his/her option.

Syndicated Loans

A syndicated loan is a form of loan that a group of lenders collectively extend to a single borrower. The group of lenders is known as a syndicate.

For example, for a loan of $1.5 million, instead of one lender providing financing for the entire loan, multiple lenders could each contribute an amount that adds up to the loan's total. 3 lenders could provide $500,000 each, which adds up to $1.5 million, allowing the borrower to acquire the financing. The returns for each lender are in proportion to the amount invested.