The various senior debt providers, and their expectations in terms of pricing and security Flashcards
What changes have taken place with the types of lenders and borrowers?
Since GFC = significant change from high street and main stream lenders to alternative lenders such as insurance companies and debt funds
Driven by stricter requirements, criteria and regulation
Recently = more crowd funding and peer-to-peer platforms where individuals can pool their cash
via a platform and lend to a borrower
As per the Investment Property Forum, what are the types of investors that make up the UK property market?
4 largest categories by investor type = 50% total market=
- UK unlisted funds
- Listed property companies
- Private property companies
- Overseas unlisted funds
Largest broad owner category = ‘direct private investors’ = private property companies, estates and charities, individual investors and sovereign wealth funds = represent 29% of total market
What did the 2019 Cass Commercial Real Estate Lending Survey conclude?
UK Banks now account for only 41% of new lending
While syndications were slow the securitisation market has picked up significantly as an exit strategy
German Banks reported a decline of 30% (and other international banks reported declines), other lenders reported increases from 7 – 11%
What are the most common debt repayment structures (for instance, interest only, constant amortisation etc.)?
Repayment / amortising mortgage
Interest-only mortgage
What is a repayment / amortising mortgage?
Paying down the mortgage + interest payments
Interest payments can be fixed / variable over time
Repayment mortgages cost less overall but come with higher monthly repayments than interest only mortgages
You will own the property at the end of the term
What are the FOUR different types of repayment mortgage?
Fixed-rate mortgages
Tracker mortgages
Discount mortgages
Guarantor mortgages
What is an interest-only mortgage?
Interest payments only
Whilst monthly payments will be less than repayment, you’ll still owe amount you originally borrowed
Interest payments can be fixed / variable over time
Interest only mortgages cost more overall but come with less monthly payments than repayment mortgages
Potentially more risky than repayment mortgages if your repayment vehicle performs badly
What is a fixed-rate mortgage?
Your interest rate remains fixed for a set period
What is a tracker mortgage?
Your interest rate tracks the base rate plus a set percentage
What are discount mortgages?
Your interest rate tracks your lender’s standard variable rate minus a set percentage
What are guarantor mortgages?
Your parent or family member guarantees the loan, meaning a lower interest rate or bigger mortgage
