Property Bridging loan Guide.

Transcription

1 Property Bridging loan Guide

2 1 You can borrow from 100,000 to 1,000, The basics What is the eligibility criteria? Please note, we do not arrange Property Bridging Our bridging loans are available for: loans on: UK-based businesses Unusual properties Property or properties located in England and Wales Properties in remote location First Charge security over the property Farms, kennels, stables or other agricultural Up to 70% LTV (loan to Value) buildings Pubs, nightclubs or cinemas. The borrower must be one of the following: (If your property falls into the last two categories, you Limited company may be able to use a business loan instead. Contact us LLP to find out more.) Partnership How much can we borrow? Sole Trader You can borrow from 100,000 to 1,000,000, with a Private investor. maximum of 70% of the property value, known as loan The bridging loans can be secured on: to Value (LTV). Commercial property While we do have the facility for interest to be rolled Industrial property up into the loan this is subject to prior agreement and the total debt including interest must not exceed the Residential property (not owner occupied) maximum 70% LTV at the end of the loan. Buy-to-let property. The term of the loan can be for anything from 3 to 24 months depending on your requirements.

3 2 The bids with the lowest rates win... How much interest will we have to pay? TThe interest rate you pay is dependent on two things: 1. The LTV The reserve rate set is linked to the LTV for your application. To give you an idea of the rates you might pay, please see the table below these are the maximum rates. LTV Monthly Cost 61-70% 1.0% 51-60% 0.95% <50% 0.85% The monthly compound interest rates above are MAXIMUM and include our monitoring fees. 2. The loan auction During the loan auction (which can last up to seven days) our investors bid to fund your loan at the interest rate they re willing to offer. The bids with the lowest rates win. If there s a lot of competition between investors, your rates could be lower than your agreed maximum rate.

4 3 During a loan auction, investors who bid with the lowest interest rates will win the opportunity to fund your loan... Who will finance our loan? You will be borrowing directly from a number of individual and institutional investors. Our secure online platform allows them to bid for a stake in your loan. Our investors will spend time comparing your and other lending opportunities on our website. The people who invest in your loan will be placing their trust in you and your project and expecting to get their money back. During a loan auction, investors who bid the lowest interest rates will win the opportunity to fund your loan. If the loan isn t completely filled by these bids, FundingKnight has partners who make up the remaining amount of the funds this provides you with certainty once your funding auction starts. What are the fees? We charge an arrangement fee of 2%, which will be deducted from the loan amount. We also charge a monitoring fee typically 0.25% per month which is included in your overall interest rate. There is no separate exit fee. You will need to pay for a professional valuation and for legal costs in relation to the loan. There will also be legal costs and a valuation fee. As a general guide these should not amount to more than 1% of the loan amount, but this will be dependant upon the circumstances of each application.

5 4 You ll receive your money when the loan auction finishes typically the funds will reach your account on the same day... When will we get the money? Funds are typically available 21 days from application. If you have all of your documents prepared and your solicitors act rapidly, it can be much faster as little as 14 days. You will receive your money when the loan auction finishes: typically the funds will reach your solicitors to complete the property transaction on the same day. Please remember that property transactions always require legal work and more complex transactions may take longer. For more information on the process, please see How can we apply? What can we use the money for? Our Property Bridging loans provide fast, short-term funding to property developers, investors or buy-to-let proprietors. You can use our loans for: Purchasing a property Especially useful when you need quick access to finance, e.g. when buying property at auction. Improvements Helpful for funding improvements to a property before you resell or let. Refinancing Repay an existing loan secured on the property. Properties must be commercial, residential (not owner occupied) or buy-to-let and in England or Wales. For more information, please read our eligibility criteria.

6 5 Here, you can read and accept our Borrower Agreement and Terms & Conditions, and make your loan application... 2 Your application How can we apply? Step one: Register and tell us some details Step four: Valuation and legal work Once you ve registered online, you ll be able to sign Once you have accepted the Heads of Terms, we will into your FundingKnight account. Here, you can read arrange for an independent professional valuation to and accept our Borrower Agreement and Terms & be instructed. This is to confirm the current market Conditions, and make your loan application. value of the property and make an assessment of any risks associated with the property that would impact Step two: We ll respond within one working day on its suitability for a Property. If your application passes our initial review, we will then agree the further supporting information we need Bridging loan and help guide you through the rest of the application You will need your own legal representatives to act on process. your behalf. We will arrange for our solicitors to liaise For more information, see What do you need from with your legal representatives to start completion of us? security over the property (or properties). Please note that the costs associated with valuation Step three: Heads of Terms and legal work will be payable by you. We will be able Once we are happy we have all the information we to give you an indication of those costs before the need, we will issue an outline of the terms, known valuation and our legal work is started. as Heads of Terms, so you have a clear indication of our interest in your request before you incur costs on valuations etc. Please note that Heads of Terms are issued once we have completed satisfactory credit reference agency checks.

7 6 During the auction you ll be able to sign into your FundingKnight account and watch as investors live bid on your loan... Step five: Your interview We will arrange for an agent to meet you at the property to give you the opportunity to show them your plans for the property and talk about your experience in property matters. One of our underwriters will also speak with you about the information in the valuation, the results of your meeting with our agent and talk you through the way your loan will be presented to our investors. Step six: Documents completed We will need our solicitors to confirm that all the security and loan documentation has been completed satisfactorily and you will need to provide us with details of the property insurance. You are now ready to put your loan to auction. For more information, see How do the loan auctions work? What do you need from us and why? If you have all the information required ready when you apply, it could speed up your application and give you faster access to funds. To help you prepare, this is what we ll need: Application form Schedule of Tenancies (if appropriate) Personal Liability Statement for each borrower/ guarantor Any recent valuation and/or estate agents particulars Disclosure of any other charges or loans that are currently secured on the property (if any), including: Lender s name and address Account reference Balance outstanding Any break/exit costs Any supporting information to demonstrate your background and experience with property.

8 7 Honesty is the best policy... How do we put together our loan presentation As you are asking a number of individual and institutional investors to fund your request, you will need to give good reasons for them to support your Property Bridging loan. It is important to get across your knowledge and experience in property matters in your presentation. The Presentation is divided in to 4 key areas. The commentary will depend on whether you are a Company, LLP, Partnership, Sole Trader or Private Investor. Your business: A description and brief background about the business (if applicable) and your involvement in property matters. You have the opportunity to add other documents describing the property itself and other projects you have worked on in the attachments section of the presentation. Who you are: Give the brief background of the directors/owners (their experience etc.) and the management team (if applicable). If the borrower is part of a group, provide further information on this here. Why you need the loan: This detail helps with encouraging investors to bid. Highlight the specific use of the loan and how it will enable the project to move forward. What makes you a good risk: This is your articulation of why investors should trust you to return their money. Specific attention should be paid to the history of the property/project, and how you see the loan being repaid including any exit contingency plans. Focus on payment history in previous projects or debt obligations, amount of funds personally invested into the business by its owners, trajectory of performance due to specific contracts or opportunities. Honesty is the best policy; in the event of any adverse credit history it is always better to mention this upfront. You should assume that it is possible for investors to unearth this information with so much data available in the public domain.

9 8 The investors who bid with the lowest interest rates will win... 3 Your money How do the auctions work? An auction is where our community of individual and institutional investors bid via our secure online platform to fund parts of your loan. If your loan isn t completely filled by these bids, we ll make up the remaining amount of the funds. In other words, you will always get your money. The only factor not set in stone is the interest rate you ll pay. While you will have agreed on a maximum interest rate, competitive bidding from investors during the auction could push down your interest rate and get you a better deal. During the auction you ll be able to sign into your FundingKnight account and watch as investors live bid on your loan. The investors who bid with the lowest interest rates will win. Auctions typically last seven days, but they can be shorter if you choose. As soon as the auction ends, you will receive your funds via a bank transfer. How do we repay the loan? Unless we have agreed to provide you with rolled up interest, you will begin to make interest payments one month from draw-down. This means there will be a fixed amount of interest to pay to FundingKnight each month, which we will then allocate to each of your investors. Repayment of the loan capital is due at the end of the agreed loan period. Early repayment You can make an early repayment of the full amount of the loan, at any time, providing you give us 14 days notice. If the loan has been running for three months or more at the date of repayment, there will be no penalty.

10 9 With strong, coherent communication, all parties can agree an appropriate course... What if we can t repay the money? If a payment is late, we charge a fee of 5.05 per day and you will start to incur penalty interest. This fee is deducted when the overdue payment is received. At our sole discretion, we may waive this fee if the payment is received up to four days late, for example if the reason for delay is a bank error or similar and you have kept us informed of what s happening. If you are encountering difficulties in making a repayment, the first thing you should do is call FundingKnight to discuss. With strong, coherent communication, all parties can agree an appropriate course of action and convey accordingly to your investors. If you miss repayments but fail to communicate with us, we will take steps to move straight to formal, legal debt recovery proceedings, through sale of the property securing the loan and, if necessary against the loan guarantors. What if we need a loan for another project / property? Simply sign in to your FundingKnight account and fill out an application. Alternatively, you can contact your dedicated underwriter or a member of our team and we ll discuss how we can help. The application process for a second Property Bridging loan is also much faster because we already have a lot of your information on file. We re here to help Any questions? Please get in touch with our friendly, expert team. Call us: us: info@fundingknight.com

11 Contact us Correspondence address Enterprise House 2nd Floor, Market Street Eastleigh Hampshire SO50 5RG Registered office 3 Acorn Business Centre Northarbour Road Cosham Portsmouth PO6 3TH All enquiries please contact info@fundingknight.com or call us on