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Investing in mortgages - Construction Loan No.2: a case study
As mentioned in our first case study, we’re providing some analyses of our borrowers, so that you can find out more about the type of lending we are doing in our P2P mortgage space, which in turn gets passed on to you as an investment opportunity.
A reminder that our Business Property Loan Investment Class has a variable rate, with all loans secured by a first mortgage and the support of a Reserve Fund.
Case study 3
Investment class: Construction Loans
Funding of a residential house in St Heliers, Auckland
The second Construction Loan on our peer-to-peer lending platform is for $410,000. The loan is secured over the house being renovated. The owner is adding an additional floor to the property and creating a separate title for it. The owner has funded half the renovation personally. The LVR of this loan is 10% - lots of equity in this loan!
The loan was fully drawn at the start of the build in February 2020 and is scheduled for repayment in November 2020. At this stage, there is no indication that the build will be delayed by Covid-19, however that remains a minor risk.
This loan falls well inside all our credit policy parameters. This borrower has also provided a personal guarantee on the loan. This means the lending is in the name of an entity (business or trust), however there is someone standing behind the loan (typically a director/trustee) who has guaranteed that the loan will be paid back at a personal level.
You can invest in this loan now. The investor return is 5.00% p.a. variable, and you can find out lots more about this investment class from our investor handbook.
This loan has the support offered by our Construction Loan Reserve Fund which helps to protect investors from loan arrears and loan defaults.
You can invest into this mortgage now. The investor return is 5.0% p.a. variable, and you can find out lots more about this investment class here.
This loan has the protection offered by our Construction Loan Reserve Fund which helps to protect investors from loan arrears and loan defaults.
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The opinions expressed in this article should not be taken as financial advice, or a recommendation of any financial product. Squirrel shall not be liable or responsible for any information, omissions, or errors present. Any commentary provided are the personal views of the author and are not necessarily representative of the views and opinions of Squirrel. We recommend seeking professional investment and/or mortgage advice before taking any action.
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