Bridge Loan Requirementsinterim credit requirements
Mr. Jupp is of the opinion that FCA regulations do not currently apply to credit facilities backed against real estate investments, inter alia buy-to-lease assets, or for commercial use. These may also comprise mixed-use objects such as stores with the above apartments, if the housing qualifications of the FCA are not fulfilled. The majority of second fee credits are in this class, although some second fee credits may be governed by the Consumer Credit Act.
Creditors and intermediaries need a corresponding consumer credit licence from the OFT in order to be able to provide and process such credits. When a loan is governed by the CCA, there are documents specified by the CCA and a seven-day "cooling-off period". Cohen, from the Jackson Cohen consulting firm, said that the Consumer Credit Act currently grants credit to individual persons and partnership agreements of three or fewer persons.
Excluded are credits that are already guaranteed by the FCA, so that, for example, a second or following fee loan is taken out instead of the first fee of the FCA. This includes credits to corporations, wealthy private persons, credits predominantly for commercial purpose and credits for real estate investments. A loan collateralised by the release from the ownership of the real estate for the purpose of investing does not comprise a loan collateralised, for example, by a home of one's own to be used for the acquisition of an asset.
"The FCA will take over the regulatory role for CCA mortgages from April 2014, and we can look forward to some consultation on changes to the scheme, particularly for HNW definition and mainly for commercial use, perhaps to bring it more into line with first-charge mortgages under MMRs.