Bridge and Peer to Peer Lending

Posted on 26th March 2014 by Trevor in Blog

Are you fed up with low interest rates on cash?

Are you concerned with the valuations of the various stock markets around the world?

Would you like to get an 8.5% fixed return in GBP? Or a 6.5% fixed returns in US$? Or Yen? Or variable returns of 10%+ in Australian dollars?

These kinds of returns can be achieved by bridge finance lending, and peer to peer.

Bridge finance is a form of loan to tide over a project close to completion. This kind of loan is high interest, but quite normal in the building industry. If you as a builder have a development project that is near ready to market but you need a few more months to finish and then sell the properties, you will willingly pay rates north of 10% in order to command the money that ensures your work will be completed and fit for sale.

Peer to peer here is a matter of cutting out the banks. The banks abandoned lending at the small-builder level after 2008 to mask their losses / put more of their money into their capital adequacy ratios.

Banner has several ways which enable you to become a direct lender with a loan-to-value ratio of below 70%. The main point about the loans is that they are short-term; the main point about the security is that it is full-recourse with loan-to-value ratios below 70% (which means that if any particular borrower defaults, the collateral can be sold off at anything up to a 30% discount and still be in positive territory).

Bridge finance interest rates are usually charged between 0.75 – 1.5% per month. Loans generally have durations of between 3 to 12 months. So for the underlying loan businesses to offer and pay these kinds of returns to you as an investor is historically realistic.

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