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Post by emoney on Nov 11, 2015 15:09:34 GMT
Good afternoon P2PIF crowd. Reading some posts about the shortage of good bridging loans, I hope you would agree with me that this is a robust lending proposition. Any feedback would be greatly appreciated. The borrowers have a number of challenger bank bridging loan options at this rate, however the challenger banks like to roll up the interest up-front, which is not attractive to these borrowers for obvious reasons. The applicants are lawyers, on substantial proven salaries with impeccable credit scores and histories. The applicants are both homeowners with equity in their properties. This is a personal peer to peer bridging loan (not a SPV or Limited Company) so restrictions on supplying you with specific personal borrower and security information apply. I can confirm that we have fully underwritten the application and the property security has been independently valued by a Chartered Surveyor and First Charge Legal Title is to be recorded by our Lawyers Metis Law. The borrowers have a proven track record of successful refurbishments and exits in the Cheshire area; - Bridging loan amount: £295,000
- Loan Term: 12 months
- Interest rate payable by borrower: 1% p.m : - 12% p.a.
- Interest payable to lenders: 0.75% p.m. :- 9% p.a.
- Current (RICS) valuation: £420,000 (4 Bed detached house in Wilmslow, Cheshire)
- Current loan to value: 70%
- Post works estimate valuation: £550,000 (Comparables support this)
- Post works estimate loan to value: 54%
The borrowers have confirmed affordability to service the monthly interest payments and the £50,000 refurbishment works.
If you have any further questions, or for new lenders who would like to speak to me direct, then please feel free to call me on 01625 750027.
The loan is live on the www.emoneyunion.com/marketplace/ Kindest regards.
Lee
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Post by emoney on Nov 11, 2015 16:23:05 GMT
Thanks to the awesome lender who has just committed £40,000 to this loan and the great new lender this morning who committed £25,000 - you know who you are !
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Post by emoney on Nov 12, 2015 10:13:43 GMT
Another new lender joined eMoneyUnion and hit the ground running with £10K investment on this loan. BIG THANKYOU Come on the crowd, let's see if we can fund this without institutional support...
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Post by emoney on Nov 14, 2015 14:15:26 GMT
51% Funded, thanks to all. I would love some feedback on this bridging loan guys, people have described it as a prime bridging loan, and they are only interested in double digit bridging loan yields. what are your thoughts? Some big ticket P2P lenders have said they will lend against it but only if it was a higher rate?
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Post by reeknralf on Nov 15, 2015 8:25:50 GMT
I think people are unduly swayed by headline rate. This is my back of the envelope calcualtion. Please criticise it. This loan - borrower pays 12% of which I get 9%. SS - borrower pays 18% of which I get 12%. Making the groundless guess that 2% covers the platform's operating costs for bringing the loan to the market, this leaves 1% and 4% respectively to cover costs associated with managing defaults, i.e. defaults are estimated to be 4 times higher on SS loans. Making an additional guestimate of 2% default for the emoney loan, and therefore 8% for the SS loan. Then combining with the 85% and 67% recovery rates samford71 posted recently. Gives 8.5% net for emoney and 8.4% for SS. As riskier loans should pay higher yields, the emoney loan is better value. This conclusion is very sensitive to my assumption of 2% platform operating costs.
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Post by emoney on Nov 15, 2015 9:20:39 GMT
Thanks for the detailed analysis, so it looks like the loan is priced correctly from your assumption.
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Post by emoney on Nov 15, 2015 14:36:43 GMT
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ablender
Member of DD Central
Posts: 2,204
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Post by ablender on Nov 15, 2015 23:13:19 GMT
What is the minimum amount that one can lend?
Is there a SM?
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Post by reeknralf on Nov 16, 2015 7:55:12 GMT
£10 & yes.
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ablender
Member of DD Central
Posts: 2,204
Likes: 555
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Post by ablender on Nov 16, 2015 8:08:55 GMT
Thanks.
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Post by emoney on Nov 16, 2015 8:52:00 GMT
Good morning, this loan will be closing Thursday 19th November at 5.00 p.m.
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huxs
Member of DD Central
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Post by huxs on Nov 16, 2015 10:06:05 GMT
Morning, I have been thinking about this loan and what it means to the market a bit this weekend and when I get time today hopefully I will start a thread under general topics about what is the risk reward of Property loans across different P2P platforms. We have Loans on FC 7-10% (some with cash back some without), we have 12% on SS, 11-13% on FS, MT with there big loan at 12% +1.5% CB but with a new partner talking about rate from 9-12% and then of course your loan. This is only the loans I see on the platforms I am on, I know there are many more. What I struggle to comprehend is how you compare the risk of each of these and value if 8,9,10,...13% is correct?
For clarity I am on eMoney Union and have invested in this loan, if you where to bring out one of these a week would I want to invest in each one of them (and therefore reduce my overall returns, which is currently at 11%), I am not sure?
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Post by emoney on Nov 16, 2015 10:58:07 GMT
Thanks for the support and feedback Huxs. These types of loans are available weekly subject to lender liquidity. If you take a look at the bridging loan market as a whole, it is maturing and becoming more professional by the day. The FCA are to be praised for driving enhanced systems and controls to a previously non regulated sector. The challenger banks, with cost of capital at circa 1% yield payable to their savers, are keen to enter this space and are making great inroads. Many challenger banks and are now are offering bridging loans at the 8 -12% p.a. rate payable to the most attractive and secure borrowing propositions. This type of loan is a prime example and hence we are keen for the crowd to fund it to retain the lions share of the yield. Challenger banks yield payable to savers ? #CAPITALATRISK #NOT COVERED BY THE FINANCIAL SERVICES COMPENSATION SCHEME (FSCS)
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huxs
Member of DD Central
Posts: 300
Likes: 218
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Post by huxs on Nov 16, 2015 15:27:48 GMT
Hi,
So as per my new thread I have started in general discussions I am going to try and rationalise the risk with this loan to test if my criteria makes sense.
I am using the following criteria to measure the risk:
Borrower risk: Private borrowers with great credit scores, good (and professional) jobs, good salary (and affordability of repayments and renovation costs checked), so minimal risk here. Property Risk: 70% LTV, at the top of my LTV comfort range but saying that private property prices are unlikely to fall more than 30% in 12months so definitely safer than other 70% LTV property loans. Lower risk here other large Bridging loans on other P2P platforms.
Property Valuation risk: No valuation docs visible due to private nature of loan, would be good to understand fire sale valuation as I assume the LTV is based on current good market conditions with sale timeline of 6months (what about if this went to Auction would it still get this price?). Post work estimate LTV of 54% is better but should be ignored at this point in time.
Other safety nets: Loan is for £295K but building working is only £50K so is this loan for the borrower's primary residence to replace existing mortgage during renovations and then re-mortgage afterwards or is for a development project buying, renovating and then selling? If the former then the likelihood of default is very low, if the later do they have any experience in this, if not a how do we know £50k is not going to turn into £100k ?? Do the renovations require any planning permission and if so are these in place already?
So bottom line is I need a bit more info to fully understand the risk but the question will probably come down to is the low Borrower risk sufficient to ensure that this loan will repay whatever circumstances and if so then 9% is probably pretty good.
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Post by emoney on Nov 17, 2015 17:08:39 GMT
Sorry for the delay in replying, I have been in London yesterday and today and I'm keen to have this loan funded under a 36H debt crowdfunded loan agreement and not for us to broker it with an institution as a whole loan. I will answer your questions one by one if I may, and many thanks for the thread you have created, it's great to have such open feedback. The £420,000 valuation is an open market value today, with no retentions. The property is in an area of high demand, with the property needing cosmetic refurbishment and this window for completion is only 28 days, the chartered surveyors valuation was in it's current condition for sale in the open market. The estate agents have stated that this will be snapped up if it does go to auction. We are aware of developers who will purchase immediately, so this is unlikely. I saw a great term today from a bridging loan company "tart and turn" which probably describes this loan opportunity down to the ground. You only have to research 4 bed detached properties on rightmove in Wilmslow Cheshire and they don't hang around for long. The borrowers are putting down £100,000 cash to purchase the property, evidenced by way of current bank statements, it is not either borrowers main residence, it's a commercial transaction albeit via a partnership as opposed to a company. The borrowers have completed other developments of a similiar nature, but again in a personal capacity as opposed to business. Private development is probably more of a correct description. The borrowers combined PAYE salaries are substantial, and they can service the loan interest payments out of personal incomes. I hope this answers your questions?
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