Earn upto 1% return per month!
The objective is to provide secure and stable returns to investors while exploiting the gaps in the asset backed lending markets created by the reduction of liquidity provision by the major lenders.
We achieve this objective by utilising investors capital to finance specifically identified bridging loans and secured lending opportunities and thereby directly lend to qualified end borrowers.
Every loan made by the Lender will have the benefit of being secured on UK Property and all documents will be in the lenders name including loan docs and legal charges.
Minimising Risk while Maximising Returns
The due diligence process for every loan made by the Lender will be similar to that conducted by any other major high street lender. A variety of strategies will be implemented to help minimize the risk to the Lenders capital exposure. These may include but are not limited to:-
ü 1st Charge taken on property (Registered at land registry)
ü A maximum net Loan To Value lending of 70%,
ü Deduction of some or all loan interest and fees from the capital sum advanced, thus reducing the net LTV exposure
ü Valuations being conducted by an independent licensed valuations expert on a 180 day quick sale valuation basis for the purpose of secured lending,
ü Background checks to verify the validity and reasons behind the loan application
ü Requirement for personal guarantees
ü A clear and identified exit for the borrower so that the loan is repaid in due time
ü Lawyers will ensure the lender receives the correct entitlements to the security offered against the loan and all legal documentation is in place between the lender and the borrower
ü All loans made are in the borrowers name and their lawyers act for the borrower
ü Funds always stay in a SRA regulated lawyers account until the funds are drawdown.
ü All loans made are in the borrowers name and their lawyers act for the borrower
YOU CAN NOW BE THE BANK AND EARN DECENT RETURNS!
The objective is to provide secure and stable returns to investors while exploiting the gaps in the asset backed lending which have been created by the reduced appetite for lending by the major banks in this sector
We will achieve its objective by utilising its own capital to finance specifically identified bridging loans and secured lending opportunities and thereby directly lending to end borrowers. As we will be making a direct investment in secured loans it will also have the benefit of having direct legal title to security taken in relation to each loan, otherwise known as a first charge. The Managers ability to achieve its stated objective will be further enhanced by its agreements with finance brokers which will aim to provide a suitable pipeline of opportunities for lenders to lend its capital.
We will generally target lending opportunities between £50,000 and £10,000,000. The finance is ‘short term’ and loans generally range in terms from one to eleven months with the majority of loans being between three and six months in term. Prior to any lending taking place, an independent RICS valuation expert will be appointed to provide a written valuation of the security that is being pledged by the borrower. Furthermore the loan manger along with the appointed valuers, lawyers and/or conveyancers, will undertake a thorough due diligence exercise to evaluate the merits of the lending opportunity.
Lawyers acting for the lenders and loan mangers will ensure that all of the loans are secured on a first charge against property in the UK and that a legal charge is registered with the UK Land Registry and any other authorities as may be necessary. Sometimes, and especially if the borrower is a corporate body, the Manager will require further additional security (e.g. personal guarantees, fixed and floating charges etc).
Loans will be provided up to a maximum loan principal of 70% net loan to value (LTV) however it is expected the majority of loans will be between 60-65% LTV.
It is common practice to deduct the interest due on the loan from the advance amount which in effect reduces the net LTV exposure.
The Lending and Due Diligence Process
Every potential borrower will have completed a standard loan application form. Once the form is received credit assessors, valuers and lawyers will conduct due diligence exercises to evaluate the merits of the lending opportunity. This due diligence process will be not dissimilar from that conducted by any other major high street lender and usually includes some or all of the following:
· Conducting a credit check on the borrowing entity and any guarantors,
· Conducting a background “high risk persons” check on the borrowing entity and any guarantors,
· Obtaining company, director and major shareholders information and conduct searches including Count Court Judgments on the same,
· Obtaining valuation report(s) from an independent surveyor for the security being offered,
· Conducting Land Registry searches in respect of the security being offered,
· Conducting a market appraisal of the security offered based on local sales transactions,
· Seeking references from other lenders,
· Conducting an affordability study by examining the net asset and liabilities statement of the borrowing entity.
Following a satisfactory due diligence exercise, the loan manager will instruct lawyers to draft the necessary loan documentation between the Lenders and the proposed borrower and to register a first legal charge over the borrower’s property. In addition the loan manager may deem it prudent to take further security over some or all of the borrower’s other assets. .
Minimising Risk to Capital
The Manager will implement a variety of strategies to help minimize the risk to the lenders capital exposure. These would usually include some or all of the following :-
· A maximum net LTV lending of 70%,
· Deduction of some or all loan interest from the capital sum advanced, thus reducing the net LTV exposure,
· Valuations being conducted by an independent licensed valuations expert often on a 180 day quick sale valuation basis for the purpose of secured lending,
· Background checks to verify the validity and reasons behind the loan application,
· Requirement for personal guarantees from individual borrowers as well as directors when the borrowing entity is a corporate vehicle,
· Obtaining Insurance to insure against material damage to the property security
· A clear exit for the borrower so that the loan is repaid in due time.
Minimising Transaction Risk
The Manager will implement a variety of operational strategies to ensure that any potential losses arising from transactional issues are reasonably mitigated. These strategies would usually include some or all of the following :-
· Ensuring valuers have specific experience of the type and location of the property they are surveying and that they have sufficient professional indemnity insurance to meet any claim arising from wrongful valuations,
· Ensuring valuations are in the name of the Lenders or in joint names if it is a syndicated loan,
· Checking solicitors have sufficient professional indemnity cover for the size of the transaction and relevant experience of similar transactions and drafting of the appropriate loan documentation and legal charge,
· Obtaining undertakings from the solicitor stating that the legal charge will be registered with the Land Registry within the time allowed,
· Obtaining a report on title from the solicitor confirming that he is satisfied with the title to the security,
· Ensuring that the charge on the title is assignable to allow the Lender to exit or sell the loan by way of reassignment.
· Following the “Mortgage Fraud: Good practice guidance note” to mitigate possible vulnerabilities to fraud in the lending process.
Full details of the loan will be contained on the offer letter with further legally binding terms and conditions stated in the loan agreement. Generally the duration of the loans made by the lenders will be between one and eleven months, with most of the loans being between three and six months in duration. Loans are likely to be between £50,000 and £10,000,000. Loans will either be made solely by the Lenders on a joint syndicated basis whereby the lending is shared between any number of parties to mitigate the risk or to participate in large transactions where it is not possible for one lender to provide all the funding.