The easyMoney Glossary – Part Two
(Capital at risk - Past performance does not guarantee future results)
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.
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; 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 stringent 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” between two situations, normally the sale of one property and the purchase of another.
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 actual and current amount that the property or development site 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% - although valuations are reviewed regularly.
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 our panel of 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 your money, and means that should a borrower default, we will try to sell the property. Do be aware that downturns in the property market could affect how much money you receive back.
Loan Grade. As its name suggests, a loan grade is a risk score that we assign to each of our loans to help us manage that risk. In this case, an “A” score represents low risk, a “B” score somewhat higher, and so on – through to “J”, obviously substantially higher.
Our expertise and knowledge inform our skills here, and in our view, easyMoney’s assessments are realistic.
We’re conservative lenders, therefore on the whole we favour scores “A”, “B” and “C” only. Log on to the My Portfolio section of your account to see which types of loan grade you have.
Tranches. We’re careful lenders, so when it comes to larger developments and higher loan amounts, easyMoney may not release the funds to the borrower all at one go. 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 assessments.
Sometimes borrowers need to have pre-sold some of their properties in order for the next amount, or tranche, to be released.
Just out of interest, all development funds are monitored and reported on a monthly basis.
Liquidity. In this context, liquidity refers to selling your investment and receiving your money back.
Do bear in mind that your IFISA isn’t a cash savings account, Instant access is not guaranteed.
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 a consistence 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.
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 how an Innovative Finance ISA could potentially work for you. Whilst there’s no such thing as a risk-free investment, we believe that our knowledge and experience in this sector has delivered excellent results for our investors, as our recent news in P2P Finance News has shown.
Here’s to our continued success – and yours, of course.
e-Money Capital Ltd trading as easyMoney is authorised and regulated by the FCA (FRN 231680). Instant access to your money is not guaranteed. You could lose all your money invested in this product. This is a high-risk investment and is much riskier than a savings account. ISA eligibility does not guarantee returns or protect you from losses. Peer-to-Peer Investments are not cash savings accounts so they are not covered by the Financial Services Compensation Scheme (FSCS). Past performance does not guarantee future results. Tax treatment is dependent on individual circumstances and subject to change.