ozboy
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Post by ozboy on Jan 31, 2017 17:39:46 GMT
I'm learning all the time and, believe me, it's not some sort of false modesty when I say I'm not as bright as many on here. Now, one thing that puzzles me with this Loan (and many similar) is why the Borrower would borrow to " clear off the existing mortgages" (plus borrow a bit extra) until the longer term development finance is sorted? Surely the existing mortgages are at a far lower interest rate than FS' interest rates, so why doesn't the Borrower simply just borrow only the interim amount they need to start and keep the existing mortgages going cheaply/cheaper, settling them in the future when the properties sell? To my mind this is a much better/cheaper option?  I must be missing something really obvious because I can't believe anyone would pay so much more for the expensive "convenience" of consolidating their borrowings/mortgages? |
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ozboy
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Post by ozboy on Jan 31, 2017 17:48:29 GMT
Ah, OK, so Commercial Mortgages (if this is the case) are hugely higher than Domestic? I knew CMs were more but have no idea how much more/higher.
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mikes1531
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Post by mikes1531 on Feb 1, 2017 2:59:32 GMT
There's also the reality that second charge loans typically incur higher interest rates than first charge loans. It obviously will depend on the actual interest rates and the relative size of the first and second charge loans, but it might be that paying off the cheaper first charge loan could make financial sense.
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bernard
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Post by bernard on Feb 1, 2017 9:30:56 GMT
Are you talking about 2026099394? If so, this looks highly irregular, unless I have misread. Listed as 60% LTV on value of 1.1mm with a first charge. However valuations show existing mortgages of approx 350k against the portfolio. So this is NOT a first charge and LTV is closer to 87%! Hoping I have misinterpreted this information as the implications for the care with which fundingsecure is using in its listings is called seriously into question - are they actually doing no DD at all or trying to mug the punters??? Either way ...... |
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bernard
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Post by bernard on Feb 1, 2017 9:44:20 GMT
Thannks @leopardcat, of course I had overlooked that. Maybe I should retract my post now!
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ozboy
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Post by ozboy on Feb 1, 2017 17:53:29 GMT
We all get emotional and frustrated with FS  |
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mikes1531
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Post by mikes1531 on Feb 2, 2017 18:07:29 GMT
There's also the reality that second charge loans typically incur higher interest rates than first charge loans. It obviously will depend on the actual interest rates and the relative size of the first and second charge loans, but it might be that paying off the cheaper first charge loan could make financial sense. Further investigation suggests that the above isn't an explanation in this case. The existing charges total £510k, so the proposed new loan isn't that much bigger. If the first charges actually were at rates significantly lower than what FS have offered the borrower, then they'd be worth keeping even if obtaining the extra £150k from FS would cost a bit more because it would be a second charge. I expect the first charge holder(s) have to give permission for the borrower to take on any second charges. Perhaps they've told the borrower that they wouldn't allow that. Or perhaps the first charges were short-term loans and the lender(s) won't allow extension. Or perhaps the current lenders are exiting the market and have asked/told the borrower to refinance elsewhere. Or...
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mikes1531
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Post by mikes1531 on Feb 4, 2017 22:13:50 GMT
Does anyone have any thoughts about the valuations? The first thing that struck me was that fundingsecure didn't get -- presumably because they didn't ask for -- any restricted marketing period (such as 90 or 180-day) values. 'Market' values are a nice starting point, but can be pretty irrelevant if the market for the sort of property involved, or its location, is thin and selling would require either waiting a long time for the right buyer to come along or offering potential buyers a hefty discount. Where a valuer has provided restricted marketing period values, the discount they suggest might be required in order to sell the property relatively quickly says a lot about the local property market, and is very relevant in a foreclosure situation. I haven't a clue whether the current state of the NI property market would suggest larger or smaller discounts than in England might be required. Another thing that struck me was the value given to the 55 acres of land let to a local farmer. At £392k it is by far the most valuable part of the portfolio, so it's very important that the valuation be reasonable. IIRC, £7k/acre seems similar to the value given for other FS land parcels, so that's not a red flag in itself, unless NI land is generally considered not to be as valuable as English land. (Again, I haven't a clue.) But I see that this land is being let for £150/acre, and that seems very low relative to its 'value'. The farmer might be a relative or friend of the owner so the rate might not reflect the market. If it does, however, then I can't imagine that anyone would pay anything remotely close to £392k for land capable of generating a gross income of only £8.25k/year. That's a gross yield of only 2.1% p.a.! My final observation was the curious names of the VR documents -- one is called 'Reduced Valuation Redacted.pdf' and the other is 'Web valuation reduced.pdf'. Might the presence of 'reduced' in the names suggest that these are replacement VRs because the ones originally provided by the valuers were too optimistic for FS to accept? Hopefully not! |
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Post by fundingsecure on Feb 6, 2017 10:04:47 GMT
Just to confirm the "Reduced" wording on the valuation is simply there as the original size of the report was too large to be uploaded onto the platform. We can confirm that nothing has been changed or removed from this valuation other than the applicants name being blocked for confidentiality purposes.
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mikes1531
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Post by mikes1531 on Feb 6, 2017 12:28:29 GMT
fundingsecure: Thanks for the input. May I ask why FS didn't ask the valuer to provide any limited marketing period values? IMHO, those provide a very useful insight into the discount that might be required in order to sell the property in a reasonable time should that become necessary.
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ozboy
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Post by ozboy on Feb 17, 2017 14:29:10 GMT
27% filled @ 14:30 on 17/2/17 - been tempted for a while but I think I'll give this one a swerve.
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micky
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Post by micky on Feb 17, 2017 14:46:55 GMT
Sensible decision I feel.
I will not be investing any more into any NI loan until the present ones begin to pay up.
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ozboy
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Post by ozboy on Feb 17, 2017 17:04:17 GMT
I seem to recall (ISTR !) that when the NI property market has gone t**s up in the past, it REALLY went t**s up? (Down 40% or more?) I too will watch NI Loans closely from the sidelines, for the time being. |
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Liz
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Post by Liz on Feb 17, 2017 18:24:53 GMT
I seem to recall (ISTR !) that when the NI property market has gone t**s up in the past, it REALLY went t**s up? (Down 40% or more?) I too will watch NI Loans closely from the sidelines, for the time being. Agreed, plenty of better loans have come and gone since this was listed.
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