GENERAL FACTS - BORROWER FACTS - INVESTOR FACTS
How do Vestrow Value the Assets?
For a property, generally a formal Royal Institute of Chartered Surveyors (RICS) ‘Red Book’ valuation will be commissioned on which Vestrow and its lenders can rely, and this will be uploaded to the Vestrow website on the ‘View More’ page relating to that loan. Vestrow also ensures that the valuer signs Vestrow’s instruction letter which makes it clear that we are relying on the valuation in making a lending decision and that the valuer has sufficient Professional Indemnity insurance cover.
However, Vestrow will also look at publicly available information, such as the last purchase price for the property, which is generally available on the Land Registry website, as well as property portals such as Rightmove and Zoopla to ensure that the valuation given by the professional valuer is likely not to be overstated. The only exception is generally UK residential property where the loan to value is below 50% based on Estate Agent’s reports and Zoopla/Rightmove estimates, where we do not always insist on a formal RICS valuation.
Vestrow have a similar process for non-property assets in that the valuer would need to make a report addressed to Vestrow and its lenders on which we can rely and have suitable professional indemnity insurance cover. We would then check the valuation against comparable we can find such as recent auction sales.
All the legal aspects on behalf of the lender are dealt with by Vestrow’s solicitors.Therefore, unless dealing with a charge over property, there is no need for an investor to have solicitors for each loan. For non-property loans where a solicitor is not required, Vestrow will use the standard documents produced by our solicitors for the loan process.
Yes – The Directors and Shareholders of Vestrow have invested in the majority of loans that Vestrow has arranged and it is their intention to continue to do so unless a single lender takes the whole loan and does not wish the Directors to participate.
Investors can be individuals, limited companies, partnerships, trusts and pension schemes.
What happens if the borrower does not repay at the end of the loan term?
There may be occasions where the borrower is not able to repay the loan at the end of the term. This is not necessarily indicative that the loan will not repay in full. For example, a property developer who is refurbishing a property to sell may have underestimated the time necessary to complete the refurbishment. Vestrow will generally contact the borrower before the loan end date to discuss the situation and this should highlight any potential issues. Vestrow will communicate any issues to the investors, along with a recommended course of action and seek votes from investors on important decisions such as whether to offer the borrower a loan extension. In general the courses of action available are:
-Take a partial repayment from the borrower to reduce the loan to value and agree a repayment plan for the remaining balance
-Allow the borrower a loan extension
-Take extra collateral (eg a charge over an additional asset)
-Commence steps to take possession of the asset in order to sell it (often at auction)
-Enforce the personal guarantee
How long does it take from pledging money for a loan until the funds are required?
There are many completed loans on the platform and would expect an investor to have funds in their account with us before pledging to a loan. For loans that are not yet finalised, Vestrow asks for funds to be deposited in Vestrow’s Client Account within 3 working days of a pledge being made. If funds are not transferred by this time, then Vestrow may replace that investors participation in the loan with another investor.
Vestrow takes the due diligence process very seriously and about a third of loans that enter legals do not complete, this tends to be because the due diligence process cannot be completed to our satisfaction. We generally do the following:
– a chancel liability check (to see if there are monies owing to the Church)
– a local search (for example to check about forthcoming new roads and planning issues)
– a drainage search (to check the property is connected to water and local drains/sewers)
– an environmental search (for example to ensure there is no risk of contaminated land or risk of subsidence or Radon gas which might reduce the value of the property)
As some of these searches can take some time, as an alternative, we ensure the borrower’s solicitor puts in place insurance to cover lenders against a potential loss in value of the property related to the above
– Director’s disqualification check
– Bankruptcy check
– Internet search on the borrower and any guarantors which might reveal something such as a criminal record
– How long the solicitor has acted for the borrower
– How many partners and employees are in the solicitor’s firm acting for the borrower and have they received any reprimands from the Solicitor’s Regulatory Authority or any other regulatory body
Fow whom does Vestrow arrange loans?
Our borrowers encompass individuals, small businesses and the owners or directors of businesses. The key characteristic about our borrowers is that they have assets to use as collateral to support the loan so that if they are unable to repay, we can sell the asset to repay the loan.
What are the typical terms for the loans?
Vestrow arranges bespoke terms for each loan. This will take into account the assets being offered as security as well as the length of the loan and the risk. Loans can vary from 3-18 months. The rate of interest paid to the investor will typically vary from 8% p.a. to 12% p.a. depending on the length of the loan and the risk.
Not necessarily. Most of our loans have terms where the interest is paid monthly, but a few have interest payments made quarterly and some have interest ‘roll-up’ whereby interest is not paid during the loan, but is all paid when the loan is repaid. Vestrow is not required to deduct money for tax purposes. However, you should declare any interest earned from Vestrow on your tax returns.
Vestrow needs to satisfy anti-money laundering requirements and so we will need to ask investors to provide a copy of their passport or driving licence and a recent utility bill before we can accept any funds.