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Post by Badly Drawn Stickman on Aug 23, 2019 8:57:55 GMT
• Borrower Sector: Real Estate
• Amount: £ 120,000.
• Term: 12 months (12 months minimum term).
• Rate: 13% - Interest and Capital.
• Security: Equitable Charge, Corporate Guarantees, Personal Guarantees.
So what is an Equitable charge when it is at home?
Edit 1
Real Estate? Are we watching American television output more than we should?
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archie
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Post by archie on Aug 23, 2019 9:00:39 GMT
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withnell
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Post by withnell on Aug 23, 2019 9:32:25 GMT
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SteveT
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Post by SteveT on Aug 23, 2019 10:11:56 GMT
I can only assume that these 2 must have maxed out their credit cards already. This is a seriously expensive way of raising £100k of "working capital" when they reckon to have a combined net worth approaching £4m
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withnell
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Post by withnell on Aug 23, 2019 10:20:10 GMT
I can only assume that these 2 must have maxed out their credit cards already. This is a seriously expensive way of raising £100k of "working capital" when they reckon to have a combined net worth approaching £4m Also I believe that a chunk of their net worth is already being pledged in the form of the corporate guarantee - also Holdco at £1m surely includes Opco @ 300k?
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Post by ladywhitenap on Aug 23, 2019 10:21:21 GMT
I can only assume that these 2 must have maxed out their credit cards already. This is a seriously expensive way of raising £100k of "working capital" when they reckon to have a combined net worth approaching £4m Agreed. It does make you wonder why a bank would not go for this with the sort of security and NW values mentioned. LW
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hantsowl
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Post by hantsowl on Aug 23, 2019 10:40:54 GMT
I can only assume that these 2 must have maxed out their credit cards already. This is a seriously expensive way of raising £100k of "working capital" when they reckon to have a combined net worth approaching £4m Agreed. It does make you wonder why a bank would not go for this with the sort of security and NW values mentioned. LW Maybe a bank loan would take too long to arrange if quick cash is required.
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Post by Badly Drawn Stickman on Aug 23, 2019 10:51:05 GMT
Arguably no more 'curious' than any P2P loan in the why are they wanting it arena. Would ablrate care to share why it is not just a second charge loan against the asset? It would seem to me that gives better security. Edit. I do however see that the equity charge may be easier to execute. |
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kaya
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Post by kaya on Aug 23, 2019 11:34:37 GMT
Hmm, 'contract with a local housing association' makes me nervous...by association.
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eeyore
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Post by eeyore on Aug 23, 2019 12:38:14 GMT
Arguably no more 'curious' than any P2P loan in the why are they wanting it arena. Would ablrate care to share why it is not just a second charge loan against the asset? It would seem to me that gives better security. Edit. I do however see that the equity charge may be easier to execute. Hmm, it may be easier/quicker to execute but, conversely, will it be more difficult/slower to call in? In the scenario that the borrower gets into difficulty and stops repaying on the ABLrate loan but continues to service the loan for the 1st charge, how does ABLrate get its hands on "our" share of the value of the asset if the holder of an equitable charge can't enforce a sale of the asset? I'm also with other posters in puzzlement about having to resort to a high interest rate P2P loan. What does the statement in the proposal mean: " The group has a number of sites either completed or under development in the Cambridge area, as well as holding an investment portfolio." Is that investment portfolio already pledged elsewhere? Too many unknowns for my liking.
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p2pfan
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Post by p2pfan on Aug 23, 2019 13:45:54 GMT
44 mins into the loan and 81% invested.
Yes, it seems like an extremely high way to borrow money as I understand that of the £120k, £20k is charges! So one wonders what the financial position of the borrowers is.
As a few people have noted, I am also concerned this is an Equitable Charge rather than a Legal Charge. I've read up a fair bit on it (thanks for the useful link above) and it seems like Equitable Charges are much weaker, where the rights over the asset "has to be decided by a court applying certain tests".
Obviously it depends on each individual situation, but, in general, anybody know how likely it is to enact the right to sell the property in the case of non-payment of the loan?
In my considerable experience with the courts over the decades as the one who has had the dirty done on them, the English courts almost always side with the rogues and crooks i.e. those who don't pay their debts and loans. (With one Property Manager who has been trying to wriggle out of paying us a fairly large amount of money for four years, whenever there is a tribunal, he sends a fax at 8am on the morning saying he is ill and so the judge gives another tribunal date five months later.)
Therefore I'm wondering if they would actually give AblRate the right to sell the property if the borrower defaulted? Anybody have an idea how implementable these Equitable Charges are in reality?
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boundah
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Post by boundah on Aug 23, 2019 14:08:19 GMT
Reasons to invest: 13%. Amortising. Fairly small loan.
Reasons to steer clear:
Second charge (effectively). High LTV. Probably overvalued, going by most other P2P property valuations. Well-off owner choosing to borrow at high interest rather than just putting a bit more of his own money in.
Not for me, I'm afraid.
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blender
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Post by blender on Aug 23, 2019 14:20:01 GMT
Ablrate could not sell the property, but could only apply to the court to have the owner pay up or sell the property, aiui. It's only a small loan for a short time. I guess that if short of cash they will pay the first charge holder first. Ablrate would have to work hard to cause a sale - but then working hard seems to be quite normal on this platform. No parrot is admitted to be dead. The bids went up to 66% very quickly, but then flattened off. Maybe I will get another nibble at 8pm? [Nope - just going at 17:35]
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rgog
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Post by rgog on Aug 24, 2019 19:33:43 GMT
Anything with an equitable charge I would not touch with a very long barge pole, and I have money waiting to be employed on the site but I would rather leave it unemployed than invest in something only backed by an equitable charge. The whole point of security backed lending is supposed to be to provide some degree of comfort that in the worst case scenario you have a chance of recovery. In this case the return offered in no way matches the risk level inherent in the deal. The risk/reward simply does not match up. I also feel the same way about 129, if anything even more strongly.
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nw99
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Post by nw99 on Aug 24, 2019 20:28:39 GMT
Good luck waiting hope you get a slice of the next one
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