Collateral UK – An Introduction

Introduction

Collateral UK was incorporated in 2014 to offer a peer-to-peer platform to investors interested in investing in the UK property market. It specialises in short-term asset backed bridging loans. Usually but not always the investment opportunities are based around purchasing new build properties from the developer, with investments repaid when a customer or tenant is found for the property. Typical terms are 90 to 180 days. The advertised ROI is 12% but this can vary across specific loan requests. Collateral UK also offer a secondary market allowing investors the opportunity to exit early if they feel the need to.

There is no minimum deposit or minimum investment on the Collateral UK platform. This platform only currently accepts bank transfers, it does not accept card payments.

Available Loans Page

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Image shows Collateral UK loan request page (with the property identity column removed).

The top row of the table (below the title row) shows the grand totals for all currently available loans. There are more rows on the platform than shown in this image so the totals look inaccurate but they are not.

 

Asset Value – shows the market value of the property requesting the loan.

Loan – is the value of the loan being requested on the assigned property.

% PA – displays the percentage ROI offered for each loan request.

LTV – shows the loan to value against the market value of the property. Collateral UK offer up to a maximum of 70% LTV against any property.

Available – is the current value of loan available for investment. If a loan is fully funded it is removed from this table until value becomes available again though an investor selling their loan part on the secondary market place.

Invested – Shows how much you currently have invested in to each loan request.

Remaining – displays the remaining time left on the loan term before expected repayment, in days.

Funded loans page

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The image shows the Loans Funded Page for Collateral UK (with the loan identity column removed).

 

Age – the number of days you have been invested in each loan request.

Amount – shows how much you currently have invested in each loan request.

Start – is the date you invested in the loan request.

LTV – shows the loan to value against the market value of the property. Collateral UK offer up to a maximum of 70% LTV against any property.

Remaining – displays the remaining time left on the loan term before expected repayment, in days.

Interest – shows how much interest has been accrued for each loan request to date. Interest is paid to the platform account at the end of each month.

Sell – is the option to sell the loan part on the secondary market.

Renew – sometimes a borrower may request a loan extension or a loan renewal. This option allows your investment to be automatically rolled over to the new loan request.

Lendy – An Introduction

Introduction

Lendy started life in 2012 but operated as the Saving Stream peer-to-peer leading platform until spring 2017 before reverting back to the Lendy name. Lendy operates exclusively in the UK real estate market by providing loans to both existing property purchases and new property development’s.

The platform offers property backed investments lent at no higher than 70% of the property value. The investor is free to choose from a variety of property providing there are loan parts available to purchase at the time of browsing. Interest is earned daily but paid monthly (first day of the month) on active investments.

There is no minimum account deposit or withdrawal for Lendy, with average advertised annualised return of 12% per annum (Rates can vary across properties). Loans tend to be for 6 month terms. An investor can either reinvest monthly interest or withdraw it. Lendy also operates a secondary market place to allow investors an early exit option if needed. All properties available for investment on this platform include an investment pack detailing everything you need to know about the loan arrangement, including intended use of borrowed capital; schedule of capital delivery; due diligence; surveyor reports; independent property valuation reports and much more.

The property investment page

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The property investment page for Lendy

The main page for the Lendy platform displays a list of properties currently available to invest in. Information displayed is as follows –

DFL013 – Is a unique reference number given to each property used for a quick reference when referring to a specific property.

Richmond Road, Bradford – This is the location of the property.

13/01/2017 – This is the date of the start of the loan agreed between the borrower and Lendy. This does not change even if the repayment schedule is restructured.

The photograph – Shows the property described.

Loan – The total value of the loan agreed between the borrower and Lendy.

Loan to value – This is the percentage value of the loan against the independent valuation of the property or development. Lendy will lend to a maximum security of 70% against the property value to accommodate market pressures or potential default and recovery proceedings.

Amount available – This is the current amount available to an investor. If a loan is fully invested in at any given time it will not appear on the investment page by default. Loans can become available again if another investor decides to sell their loan part on whats known as the secondary market. In fact most of what you see on investment page is actually secondary loan part sales. New properties (primary’s) tend to snapped up quite fast in the first instance.

The account page

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Lendy Account Page

Balance – This is the total amount of money you currently have on the platform. The figure is made up of funds deposited, plus funds invested, plus interest earned from previous months (does not include the current part month interest until its paid out on the first day of the month) minus any losses through defaults.

Live loan parts – Shows how much you currently have invested in live loans.

Available funds – Is any money in your account not currently invested in a loan part. When interest is paid at the end of the month it will show as available funds, until you either reinvest it of withdraw it in to your bank account.

Export to Excel – A handy little button that allows you to download all your account figures in to an excel document, handy for record keeping and tax calculating.

Drawdown – This quite simply means the borrower has started to access and spend the money they have borrowed, meaning the loan is active and investors interest will be calculated at the rate as outlined in the investment pack. It is not uncommon for larger loans to be broken down in to smaller development tranches, with the borrower required to achieve defined milestones before the release of the next wave of funds. This is mealy an additional security measure designed to limit the impact of a potential default. Details of such arrangements can be found in the investor pack attached to the property.

Remaining – This shows in days the time left on the original loan agreement. The common loan term for Lendy is 6 months but can vary as agreed in the terms of the loan between Lendy and the borrower. If the remaining time is show as a negative number this means the original repayment deadline has elapsed. This does not necessarily mean the loan has defaulted. It usually means the terms have been adjusted, so repayment may take longer than originally expected, however interest will still be paid to investors every time the borrow makes a repayment. Specific details of the loan progress can be found in the investment pack and are also summarised in a weekly email to all investors on the platform. Total default and recovery proceedings are a last resort following exhaustive renegotiation and repayment restructurings.

Amount – This column indicates the amount of money you currently have invested in any single investment. There is no minimum amount you need to invest meaning you can directly reinvest all of your monthly interest if you like, maximizing your returns.

Interest  – This is the total amount of interest earned on each loan part to date. The amount will include any interest gained in the month but not paid (at the end of the month). It’s also worth noting that this shows the total interest earned for the duration you have been invested in that loan part ie. if you have been invested for two months it will show the total for the two months not just the amount for the current month.

 

The secondary market

The Lendy platform operates what is known as a secondary market. This is essentially an early exit option for an investor if they need to release invested capital before the end of the loan term.  How this works is actually quite simple.

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The Lendy sell loan window

Find the loan part you want to sell from the list on your account page, click on it and click on ‘sell loan part’. It will take you to a page detailing the property, scroll down and you will see the box show in the picture above. You can sell all or a portion of the loan part by using the slider or typing an amount in to the box. The ‘sale queue’ on the example above is £97,193.13 . This means if the loan part was to be put up for sale it would have to wait for the queued balance to be sold first. The flip side of sale que is the value available for investment of that property shown on the property investment page at that given time.

As soon as a loan part is queued for sale it will no longer gain interest. If you were to cancel the sale of the loan part it will return to earning interest. There are no transaction charges involved with either selling or canceling sales of loan parts on the Lendy platform. It’s worth noting that the secondary market is still a marketplace requiring demand for loan parts being sold, if there is low demand it will take much longer for the sale que and then your loan part to be sold. So the balance between offloading investments and loosing potential interest is something of a personal preference and will probably take a bit of experimenting to work out whats best for you.

What is PropTech ?

PropTech is short for Property Technology. This term casts a wide net over a number of areas but can defined by any technology developed to assist in the purchase, leasing or marketing of property. With-in the PropTech sector a number of platforms have sprung up in recent years allowing the small fish investor (like me) to easily invest small amounts in property transactions in exchange for a reasonable return. We all know UK banks are currently delivering pitiful returns on savings accounts at this time so its good to know there are alternatives.

Of course its has to be said any money invested in these platforms is at risk like any other investment, so be aware you can walk away with less than you started with if a borrower hits choppy waters and starts to default on repayments. I would suggest reading as much as possible on your chosen platform and more generally about the sector so your eyes are open before making any commitments.