Post by marc77 on Sept 3, 2016 15:32:52 GMT
Did anyone take part in this? It was an 8% loan, so the highest for sometime on LI, which filled very quickly (I didn't get time to check it out enough). The loan was for £232,000.
The security was a place with a rental value of £16,800pa, but with only 33 years left on the lease. To back this up an additional property with a £160,000 OMV was also given.
I'm curious to know what value to put on the first property? The owner, who had recently bought at auction, was seeking to extend this before exiting the loan and refinancing.
I'd make these assumptions:
-Use a discount rate of 12%, presuming this to be what LI charges the borrower
-Assume net income of 10/12 of £16,800 allowing for 1 month of rent to go to the letting agent and another month on average for voids and repairs.
For a payment stream of 33 lots of £14,000 at a discount rate of 12% gives a present value of £114,000. The OMV stated on LI for this property is £225,000. And £16,800 at a 5% yield implies a £336,000 valuation for a normal lease. How can I tie these three valuations together? The last two imply that the cost of extending the lease is in the £110,000 region - is that realistic?
The security was a place with a rental value of £16,800pa, but with only 33 years left on the lease. To back this up an additional property with a £160,000 OMV was also given.
I'm curious to know what value to put on the first property? The owner, who had recently bought at auction, was seeking to extend this before exiting the loan and refinancing.
I'd make these assumptions:
-Use a discount rate of 12%, presuming this to be what LI charges the borrower
-Assume net income of 10/12 of £16,800 allowing for 1 month of rent to go to the letting agent and another month on average for voids and repairs.
For a payment stream of 33 lots of £14,000 at a discount rate of 12% gives a present value of £114,000. The OMV stated on LI for this property is £225,000. And £16,800 at a 5% yield implies a £336,000 valuation for a normal lease. How can I tie these three valuations together? The last two imply that the cost of extending the lease is in the £110,000 region - is that realistic?
