The easyMoney Glossary – Part Two
(Capital at risk - Past performance is not an indicator of future results. Not protected by the Financial Services Compensation Scheme (FSCS). Money invested through easyMoney is concentrated in property and could be affected by market conditions. For the same reason, instant access cannot be guaranteed. We do not offer investment or tax advice. Please note that the parameters contained in this blog are subject to change as our business evolves).
We hope that you found our first Glossary blog useful. Welcome to Part Two.
Here at easyMoney, we’re always looking for effective ways to reach out to would-be and existing investors alike. So, look out for regular jargon-busting “how-to” blogs, or useful, informative pieces from us. No doubt we’ve mentioned this before, but anything relating to money and investments CAN seem complicated. Just one or two words that you’re not sure about and perhaps your mind wanders. It may even put you off.
Well, not with us.
The easyMoney philosophy is all professionalism, experience and knowledge. Not to mention concise, clear-cut communication, and, of course – making things easy to understand. You may wish to refer to our FAQs pages on this website; they’re full of helpful content about our IFISAs to help you make an informed decision about your investments. Please do not forget we are unable to give investment or tax advice, always consult a professional before making an investment.
Sharing the Good News
To start, however, we’re excited to let you in on some great news:
The renowned online publication Peer2Peer Finance News has reported on May 24th that still, more than three years after our launch, easyMoney has never lost a single penny on any of our loans. However, our success stretches back further: before easyMoney was founded, we acquired the successful property lending business, Tower Bridging – in effect delivering 15 years of great service and good returns, yet again without a single loss.
We think that experience and knowledge count for a great deal.
Our Chief Executive, Andrew de Candole has over 40 years’ expertise within the real estate sector and has taken two real-estate companies from start-up to public floatation; indeed, our whole team has decades of combined knowledge and understanding of this area of business. In our view, property lending should only be done by property professionals.
In light of this update, we’re pleased to introduce the second half of your easy-to-read guide to some of the terms most often used by the easyMoney team.
Bridging Loans and Development Loans
Peer to peer lending with easyMoney focuses on loans to property professionals and small to medium house builders who meet our strict lending criteria. It’s worth clarifying the difference between the two types:
A bridging (or bridge) loan is a short-term loan that “bridges the gap” often the purchase of a property and its refinancing or sale.
A development loan is more general: longer-term, they’re for property businesses to build or develop real estate within the UK.
Loan-to-Value (LTV). This is the ratio between the amount of money we lend against a property versus the current amount that the property is worth. A key criterion of our evaluation of the security of a bridging loan, LTV calculations at easyMoney reflect our careful, conservative approach. That is, we only finance bridging loans with a maximum loan-to-value of 75%.
Loan-to-Gross Value (LTGDV). Another evaluation benchmark, this time regarding the security of a property development loan. Again, it’s the ratio between the sum lent and the estimated open market value of the development after everything in the project has been completed. Plus, we don’t necessarily advance all the funds at once (see Tranches, below)
(For both LTVs and LTGDVs, all valuations are undertaken by valuers from the Royal Institution of Chartered Surveyors.)
Legal Charge. Each loan on our platform is secured with a legal charge on properties in the UK. This helps to protect peer to peer investor's money and means that should a borrower default, a property can be sold and funds returned to the investors. Do be aware that downturns in the property market could affect how much money you receive back. Your capital is at risk and past performance is not an indication of future results.
Loan Grade. As its name suggests, a loan grade is a risk score that we assign to each of our loans to help us analyse that risk.
Generally, easyMoney lends against “A”, “B” and “C” scores. Log on to the My Portfolio section of your account to see which types of loan grades you have.
Tranches. When it comes to larger developments and higher loan amounts, easyMoney releases the funds to the borrower as work progresses. In order to protect your money and make sure that the money is being deployed effectively and that everything is on schedule, our external monitoring surveyors carry out regular on-site meetings to assess drawdown requests.
Liquidity. In this context, liquidity refers to selling your investment and receiving your money back.
Do bear in mind that your IFISA is not a cash savings account, Instant access is not guaranteed and your capital is at risk, past performance does not guarantee future results. Funds are not protected by the Financial Services Compensation Scheme (FSCS). Money invested through easyMoney is concentrated in property and could be affected by market conditions. For the same reason, instant access cannot be guaranteed. We do not offer investment or tax advice.
So, although you can ask us to sell some or all of your loans at any time you chose, there has to be someone willing to buy it. Plus, the loan must have a good “history”, that is, evidence of consistent performance. You’ll also need to have at least one month left on the term of the loan. Should a buyer not materialise, you will need to wait until the borrower repays the loan. Or, if they default, that easyMoney concludes the recovery process.
In Summary…
We hope that you’ve found Part 2 just as useful as Part 1.
Do get in touch if you’d like some more information about an Innovative Finance ISA. Whilst there’s no such thing as a risk-free investment, our knowledge and experience in this sector have delivered excellent results, as our recent news in P2P Finance News has shown.
easyMoney is not a cash savings account. You may not get back the full amount you put in. Your capital is at risk if you invest. Peer-to-peer investments are eligible for an Innovative Finance ISA which is not a Cash ISA. They are not protected by the Financial Services Compensation Scheme (FSCS). Money invested through easyMoney is concentrated in property and could be affected by market conditions. For the same reason, instant access cannot be guaranteed. We do not offer investment or tax advice.
easyMoney is the trading name of E-money Capital Ltd, a company incorporated in England & Wales. Registered office is 5 Fleet Place, London, England, EC4M 7RD (Company No. 04861007). E-money Capital Ltd is authorised and regulated by the Financial Conduct Authority (FCA) #231680.