|
Post by MoneyThing on Feb 9, 2016 10:20:21 GMT
Morning,
I would be grateful if I could get some feedback as to whether there might be the appetite from our lenders to provide more funding against our Cardiff loan (MT277 & MT328).
There is the opportunity for us to refinance the existing 1st charge holder which the borrower is keen to do as we are able to offer better rates. The 1st charge holder is amenable to this.
Proposed approach:
We would look at increasing our 3rd charge (at 13% interest to lenders), by amounts of probably £300,000 each week for 5 weeks until such time as the £1.482m 1st charge holder is taken out.
Since we would be refinancing the 1st charge holder, the overall LTVs for MT328 and the additional tranches (3rd charge), would remain constant. (MT277 2nd charge LTV would decrease).
Upon successful refinancing of the 1st charge loan, MT277 would then become a 1st charge and MT328 (and subsequent tranches), would become 2nd charges.
Would very much welcome your thoughts on this.
Kind regards,
Ed
|
|
|
Post by manxfinch on Feb 9, 2016 10:48:26 GMT
Hi Ed - personally, I'm not that interested in anything that is not 1st charge.
|
|
SteveT
Member of DD Central
Posts: 6,871
Likes: 7,915
|
Post by SteveT on Feb 9, 2016 10:57:59 GMT
Sounds like a good opportunity to improve the security of MT277 (to become the 1st charge loan at 12%) and lend further sums at 13% at the same overall LTV (against what will become the 2nd charge). I think we would need formal confirmation that the value of the 1st charge loan was reduced with each additional MT tranche. ie. That there won't be an interim increase in the overall LTV whilst the refinancing is taking place. Unless I'm missing something, I don't really see a downside. I imagine there will be sufficient capacity for the new tranches from more recent MT lenders, although whether all 5 can be filled at weekly intervals remains to be seen. Is there scope to extend the time between tranches if, say, the 3rd or 4th new tranches take a bit longer to fill? Of course, in that scenario, there's always the option of a bit of Cashback ...... [whistles]
|
|
Monetus
Member of DD Central
Posts: 1,179
Likes: 2,961
|
Post by Monetus on Feb 9, 2016 11:01:55 GMT
Hi Ed,
As you know I already have a fairly sizeable chunk in the original loan and would definitely be interested in increasing this as I think it's shaping up to be a solid deal and the developer has a proven track record of success on these types of developments.
I would be happy to increase my holding with this new proposition...
Cheers,
|
|
|
Post by MoneyThing on Feb 9, 2016 11:03:20 GMT
Sounds like a good opportunity to improve the security of MT277 (to become the 1st charge loan at 12%) and lend further sums at 13% at the same overall LTV (against what will become the 2nd charge). I think we would need formal confirmation that the value of the 1st charge loan was reduced with each additional MT tranche. ie. That there won't be an interim increase in the overall LTV whilst the refinancing is taking place. Thank you stevet. I can confirm that we would coordinate the refinance of the £300,000 tranches directly with the 1st charge holder before listing these on the platform and thus the LTV will remain constant throughout (i.e. no interim increase in overall LTV). Regards, Ed.
|
|
jamesc
Member of DD Central
Posts: 447
Likes: 253
|
Post by jamesc on Feb 9, 2016 11:03:39 GMT
Hi Ed
I think the idea is interesting and although it wont be a 1st charge it will be a 2nd charge after a smaller MT 1st charge, which is much better than a 3rd charge after an unknown 1st charge holder and a MT second charge. Given how easily MT328 went out the door and this will be better security for the same rate, particularly given you will be putting the loan out over several weeks I think it should fly no probem. However it does beg the question if a problem was to arise half way through the re-financing as to who had what security and could leave the MT328 loan holder's rather exposed. Personally my fear with 2nd charges is if there is a default then the 1st charge holder will act purely in their own interests to the detriment of other charge others. In this case given the 1st charge is controlled by MT then personally I would sleep much better.
James
|
|
|
Post by MoneyThing on Feb 9, 2016 11:04:21 GMT
Hi Ed - personally, I'm not that interested in anything that is not 1st charge. Acknowledged. Thanks manxfinch. Ed.
|
|
daveb4
Member of DD Central
Posts: 220
Likes: 116
|
Post by daveb4 on Feb 9, 2016 11:55:14 GMT
Good idea and I would be keen to contribute a small amount.
Positives
- It will improve our two existing positions - easier and cheaper if we hold all charges to enforce.
- More deals
Negatives
- How much interest is their for another £1.42m in one site? - are most people in for enough anyway?
- Are you 100% certain though that during the tranche draws if enforcement happened by 1st mortgagee it will not get very messy?
- What happens if you get away one or two tranches and then the last few do not get taken up - again could be messy?
Best would obviously be take out 1st mortgagee in one go but the reason of not doing that is probably not be able to fund in one go? but at the same time will you be able to fund 5 x £300k?
|
|
SteveT
Member of DD Central
Posts: 6,871
Likes: 7,915
|
Post by SteveT on Feb 9, 2016 11:59:46 GMT
- What happens if you get away one or two tranches and then the last few do not get taken up - again could be messy? The tried and tested solution to this (across many platforms) is adding some Cashback to the later tranches, if needed, to encourage lenders with deeper pockets to lean in and fund the later tranches initially, selling down their stakes on the SM over the following weeks / months. Sticking 1% CB on the later tranches, if they're hanging about, will shift them in no time.
|
|
huxs
Member of DD Central
Posts: 299
Likes: 218
|
Post by huxs on Feb 9, 2016 12:27:57 GMT
Count me in. My concern about this is more to do with when it gets launched, if the SS pipeline opens up soon and ABL start dropping the loans it is promising then the pool of investor cash may empty pretty quick.
|
|
pom
Member of DD Central
Posts: 1,922
Likes: 1,244
|
Post by pom on Feb 9, 2016 12:50:31 GMT
I would certainly do some but either would invest less in each tranche, or not go for all of them, as I'm also in Bradford which is the same borrower, so he's starting to account for quite a high proportion of my MT loans.
|
|
dawn
Member of DD Central
Posts: 308
Likes: 275
|
Post by dawn on Feb 9, 2016 12:55:09 GMT
I am also interested in this idea. However Broadoak also said they hope to have 4 more property loans go live by the end of the month so careful timing may be required.
|
|
ben
Posts: 2,020
Likes: 589
|
Post by ben on Feb 9, 2016 13:41:03 GMT
Again would be interested but same as others have said few other loans have come through at the moment so might be hard to fund it.
|
|
webwiz
Posts: 1,133
Likes: 210
|
Post by webwiz on Feb 9, 2016 14:00:11 GMT
IIRC we could have as much of the first two as we wanted, so it is not obvious why lenders would now want to invest more. Maybe some people have some extra cash available and you will have had some new lenders I suppose, but regrettably I have some doubts whether sufficient appetite is there. Have a look at the speed with which the other two filled; you can probably judge better than us.
|
|
|
Post by pepperpot on Feb 9, 2016 14:22:06 GMT
Here was me thinking SS was a lean mean fighting machine, yet MT can offer the borrower and the lender a better deal. Ed's been working out and getting ripped!
And as JD says, there will be an extra £1.5m of SS money looking for someThing to do, so it might entice a few more sign ups!
|
|