macq
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Post by macq on Jun 1, 2017 21:43:53 GMT
had e-mail about a new loan tomorrow with Access Property Finance and just have a question for people who have been doing this a while.Is it good/bad that its another loan with Access in the sense that as a company they may get into trouble or does each loan come with its own security?
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Post by elephantrosie on Jun 1, 2017 21:56:16 GMT
tell me the history. what happened?
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macq
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Post by macq on Jun 1, 2017 21:59:53 GMT
no history(i hope) just that there's already a few loans with Access & wondered if that's considered a good or bad thing
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blender
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Post by blender on Jun 1, 2017 22:18:15 GMT
Nothing wrong with that source, but I will look for good independent security.
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sg
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Post by sg on Jun 2, 2017 1:06:33 GMT
While each 'loan' may come with its own security there is, as far as I know, no ringfencing of the capital given to the borrower so this is, in effect, not a separate new loan but an extension to an existing facility to the same company in exchange for further security. The risk of default is entirely linked to the other 'loans' to the same company and in reality it is all one loan. There is also a partially linked risk to other companies within a group of companies although to what extent is difficult to say. For my purposes I treat all loans to a single company as one big loan with the total security as given. Once my single loan limit is reached, whether the money is in one or all of the parts, then that is it. That's where I'm at with this one, no more to give. That is not to say this isn't a good loan, just that I have reached my limit. It's important to realise that the risk of default lies with the borrower not the security. The risks with security are after default and to do with the percentage recoverable. This is the main problem I have on this platform, I'm at my limit with all the borrowers I can invest with and can't get more money lent until new borrowers arrive, not so-called new loans.
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macq
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Post by macq on Jun 2, 2017 7:28:47 GMT
think what worries me a bit is by keep lending to the same borrower i am not diversifying as much as i would like across a platform & its starting to feel like a platform within a platform.But on the flip side i can not prove that a company with only one loan is any stronger and may only give the illusion i have spread my risk.Which is why i hoped each loans security was ring fenced or at least the extra security on a loan i.e todays one has additional security of personal guarantees (although i know some people dont like them) would make multiple loans a bit safer. By the way i am not saying Access property are not safe or not a good company but its a bit like the £85,000 safety net with banks & bs most experts tell you to check that you don't have too many accounts that are from one parent company but under different names as you could lose the spread of risk.
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Post by ablrate on Jun 2, 2017 7:58:57 GMT
While each 'loan' may come with its own security there is, as far as I know, no ringfencing of the capital given to the borrower so this is, in effect, not a separate new loan but an extension to an existing facility to the same company in exchange for further security. The risk of default is entirely linked to the other 'loans' to the same company and in reality it is all one loan. There is also a partially linked risk to other companies within a group of companies although to what extent is difficult to say. For my purposes I treat all loans to a single company as one big loan with the total security as given. Once my single loan limit is reached, whether the money is in one or all of the parts, then that is it. That's where I'm at with this one, no more to give. That is not to say this isn't a good loan, just that I have reached my limit. It's important to realise that the risk of default lies with the borrower not the security. The risks with security are after default and to do with the percentage recoverable. This is the main problem I have on this platform, I'm at my limit with all the borrowers I can invest with and can't get more money lent until new borrowers arrive, not so-called new loans. You are, of course entitled to your opinion, however, we would beg to differ. Each loan carries security, separate to any other loan. The security on one is not affected by the security on another, the default of one, would not trigger the default of another. Each loan could have been made directly to the underlying borrower, but by layering it through a sponsor we align that sponsors' outcome with that of lenders. The suggestion that making a loan directly to the underlying borrower would, in some way, be more secure is, imho, incorrect.
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macq
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Post by macq on Jun 2, 2017 8:12:40 GMT
Good to know -so if something was to happen to say Access property for example, this would not cause any problems or would it only be admin problems in the running of each loan etc?
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blender
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Post by blender on Jun 2, 2017 8:29:48 GMT
While each 'loan' may come with its own security there is, as far as I know, no ringfencing of the capital given to the borrower so this is, in effect, not a separate new loan but an extension to an existing facility to the same company in exchange for further security. The risk of default is entirely linked to the other 'loans' to the same company and in reality it is all one loan. There is also a partially linked risk to other companies within a group of companies although to what extent is difficult to say. For my purposes I treat all loans to a single company as one big loan with the total security as given. Once my single loan limit is reached, whether the money is in one or all of the parts, then that is it. That's where I'm at with this one, no more to give. That is not to say this isn't a good loan, just that I have reached my limit. It's important to realise that the risk of default lies with the borrower not the security. The risks with security are after default and to do with the percentage recoverable. This is the main problem I have on this platform, I'm at my limit with all the borrowers I can invest with and can't get more money lent until new borrowers arrive, not so-called new loans. You are, of course entitled to your opinion, however, we would beg to differ. Each loan carries security, separate to any other loan. The security on one is not affected by the security on another, the default of one, would not trigger the default of another. Each loan could have been made directly to the underlying borrower, but by layering it through a sponsor we align that sponsors' outcome with that of lenders. The suggestion that making a loan directly to the underlying borrower would, in some way, be more secure is, imho, incorrect. I am very glad that you have responded to that, Ablrate, because it is not a matter to be left unclear. Irrespective of to whom the loan is made as borrower, I have understood that the asset security pledged against the individual loan is tied to that loan and not pooled in some way. I can then take a view of the security for each loan offered by a sponsor, and pick and choose without the difficulties of assessing the pooling. That is not to deny the contingent risk of a common sponsor - which does not trouble me too much, personally. However this should not be a matter of opinion with sg saying one thing and Ablrate another. I would prefer the platform operator to state the facts without 'beg to differ' and 'imho'. It is good to be polite to lenders, and that is appreciated, but there are different roles here, and definitely different responsibilities.
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registerme
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Post by registerme on Jun 2, 2017 8:46:03 GMT
It is worth considering if only because of an example I have on another platform where one lender has multiple loans all with different (and some common) underlying security. Now that lender may, or may not, be entering troubled waters. They are expecting to "restructure" their various businesses. I honestly have absolutely no idea at all what will happen to the security associated with the various different loans.
Note that I am not saying that this is the case here, or that there's anything to worry about. But if a company gets into trouble things can get a bit wriggly.
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blender
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Post by blender on Jun 2, 2017 9:27:13 GMT
It is worth considering if only because of an example I have on another platform where one lender has multiple loans all with different (and some common) underlying security. Now that lender may, or may not, be entering troubled waters. They are expecting to "restructure" their various businesses. I honestly have absolutely no idea at all what will happen to the security associated with the various different loans. Note that I am not saying that this is the case here, or that there's anything to worry about. But if a company gets into trouble things can get a bit wriggly. That's why the clear registration of charges is so important.
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sg
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Post by sg on Jun 2, 2017 9:33:05 GMT
ablrate I would be very glad to be corrected in my view on this point as it does restrict my lending. Am I not correct that while the security is separately assigned to the lenders the loans are to A* P* F* Ltd. Therefore if this company went into liquidation on Monday all loans to it would effectively be in default unless for some reason the administrators thought continuing interest payments would benefit creditors somehow. Based on that I have a loan limit which I am happy to loan to that company and which I am at, another loan coming along does not change that situation at all. I don't see how that company subsequently lending the money changes the risk from the parent company defaulting, if the secondary borrower defaults the risk of that lies with the company we are lending to and not us and if that company chooses to default that single loan from us we would have recourse to its assets as well as the security if necessary. The question is really "Is the default risk from this borrower any different when the loan is split into several small loans than if it was one large loan with multiple properties as security ?". As I said I would be glad to be shown to be wrong on this so please clarify this for me.
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david42
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Post by david42 on Jun 2, 2017 9:39:44 GMT
Summary of the loan details Loan name | :
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| 1000074 A***** P******* F****** Secured Term Loan
| Borrower | : |
| A***** P******* F****** Ltd
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Loan Amount | : | £ | £500,000 to £760,000
| Security 1st charge, 90day sale
| : | £ | 895,000 [84% LTV]
| Security 1st charge, market value
| : | £
| 995,000 [75% LTV]
| Security including £300k of 2nd charge over three properties, market value
| : | £
| 1,295,000 [59% LTV]
| Additional security: 2 personal guarantees each with a net worth in excess of £1,000,000
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| Term | : |
| 6 months to 18 months
| % PA
| : |
| 13% interest only, instant returns
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Loan purpose Purpose - refinance A***** P******* F****** Ltd Risks Planning: Valuation assumes full planning permission. Outline planning permission granted; expecting to get full planning approved as the burnt out property is an eyesore and the council are keen for more residential developments ro be built in the area. Exit Strategy Refinance to developers upon full planning permission, decision expected in 2-3months. Note There is an outstanding charge registered on our SPV Si******* at Companies House against our security. This will need to be removed to provide our 1st charge security.
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stub8535
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Post by stub8535 on Jun 2, 2017 10:13:48 GMT
I am rather surprised at some of the comments about acf expressed and the underlying security. Having done the sensible thing that is "read ALL the documents" I find the answers to all the concerns expressed above for this particular loan. I do understand the concentration risk mitigation as I experience it elsewhere and apply a limit but only because the loans securities are all interconnected. david42 was the outstanding charge you mention the ccj for £480 that is a matter of dispute that must be cleared before drawdown or another charge that I missed on first reading please? On a local knowledge level, living in Birmingham, I know of the area where the properties are located. The road is a busy commuter road to the South of Birmingham. Locally there is Queen Elizabeth hospital which has a large staffing level. It is one of the teaching hospitals for many specialist functions and contains wards specifically for armed forces injury rehab. Birmingham University (Russell group) is a little further out along Hagley Road. Other colleges and ex polytechs are local as well. The nurse training university is within a short walk also.
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elliotn
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Post by elliotn on Jun 2, 2017 10:56:31 GMT
stub8535 the o/s charge is on 425 address (presumably to be updated as we are now refinancing ACF).
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