Understanding the risks
easyMoney is not a cash savings account.
The easyMoney platform matches carefully selected property professionals looking to borrow short term finance (3-24 months) for business purposes, secured against UK property, with investors looking to invest.
The easyMoney senior team has many years of experience in property and property lending and undertakes rigorous due diligence on all borrowers and the properties against which your money is lent.
All investments contain an element of risk:
Interest and capital
- The target return is the interest rate we are currently targeting to achieve on loans in a portfolio. There will typically be periods during which your money will be held in cash before we are able to fully allocate it to loans (known as “cash drag”). This can happen both when you invest initially and once a loan is repaid and we need to re-invest the proceeds. The actual rate of return you receive will be lower than the loan interest rate where cash drag occurs. The actual rate of return will also be adversely affected if for example there are any defaults, if there is a fall in the value of the property or if you have to pay tax on the interest you receive. Any changes to the current target rates will be advertised on our website.
- We reserve the right to close any offer and to launch a new offer at any time. Returns are subject to change from time to time, entirely at our discretion. Any new products or changes to existing products will be displayed on our website.
- If you do not wish to re-lend your money on new advertised product terms, as amended from time to time, you must remember to switch off your auto invest button to avoid your monies being automatically invested on the new product terms.
- On bridge loans, we lend a maximum of 75% of the value of a property.
- On development loans, we lend a maximum of (1) 75% of the initial value of the property, plus (2) 100% of construction costs. Total lending under (1) and (2) (including all interest, fees and other costs) is capped at 70% of the anticipated Gross Development Value (namely the price that the valuer anticipates the developed property will sell for).
- Valuations are generally undertaken by a Royal Institution of Chartered Surveyor's (RICS) valuer. Valuations are the valuer's opinion of the value at date of valuation and are subject to change over time. If the value of a property against which you have lent falls, the borrower may find it harder to sell or refinance the property.
- Bridge loans lend against the initial value of the property. Any building or development works generally have to be paid for by the property owner.
- Property development loans can potentially carry more risk than bridge loans because you are reliant on the developer, his project manager, contractors and other professionals to undertake the construction diligently and expeditiously. Unforeseen problems and changes in circumstances can also occur during the construction and sales process which could potentially result in their being insufficient monies to repay the loan. A professional monitoring surveyor is appointed to make regular site visits during the construction process and is responsible for identifying and reporting on any potential issues as they occur.
- easyMoney undertakes detailed due diligence before entering into any loan on your behalf, but if for any reason a loan becomes non-performing, we will work with the borrower to recover any missed interest payments. If necessary, as a last resort we will commence repossession proceedings in order to sell the property. If the property is not in a completed state, it may be necessary for easyMoney to take over and complete the development in order to maximise the return. This may take some months.
- Your interest and capital are not guaranteed and there could be a shortfall if for any reason there is a delay in investing funds into underlying loans or the property is sold for less than the outstanding sums owed as a result of fraud, property market fall, erroneous valuation, non-delivery of development milestones etc. Your investment is not covered by the Financial Services Compensation Scheme (FSCS).
Sometimes, for various reasons, underlying borrowers can be late in paying their monthly interest. In this event we may, at our discretion, pay interest to investors on behalf of the underlying borrower for up to two months. If two monthly payments are missed by the borrower, then easyMoney will categorise the loan as being in default. We will work with the borrower to recover any missed payments and to obtain repayment of the loan. As a last resort we will repossess and sell the property.
You can request to sell some or all of your loans at any time, but the ability to sell is dependent on the availability of willing buyers and the loan must have a history of consistent performance with at least 3 months left on the loan term. If there are no willing buyers, you will have to wait for your repayment until the borrower repays or, in the event of default, that we conclude the recovery process.
We shall use our reasonable endeavours to diversify your portfolio of loans. We do this by selling part of your initial loan portfolio and re-investing into new loans coming onto the platform over time. The diversification level may change from time to time according to the number of loans available and their performance. The diversification process may take a period of months to achieve. Until then, your money will be concentrated in a smaller number of loans, meaning that the impact of any individual non-performing loan on your overall investment will be greater. You can view your loan portfolio and any cash held on your ‘My Portfolio’ page.
Conflicts of interest
The management of any conflict of interest is important to us. In order to have a pool of loans available for Regular, IFISA and Pensions investors (“platform investors”) we have arrangements in place with a number of established professional investors to underwrite loans. As these investors typically provide larger sums on a medium to long-term basis, they receive a higher interest rate than platform investors. We make sure that no platform investor gets priority over any other platform investor based on any factor other than the time at which they place their investment.
Backup in the event of platform failure
easyMoney is responsible for administering loans on your behalf. If easyMoney were to stop operating, the existing loans would be passed to a standby servicing company to take over the management of the loan book and oversee the return of your investment. Please see our FAQs for further details about our “Living Will” arrangements
Any money waiting to be allocated to loans will be held within segregated client accounts at NatWest and, if NatWest were to become insolvent during this period, your cash would be covered by the Financial Services Compensation Scheme (FSCS) until it is invested.
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Last updated: 2018-11-23