The various senior debt providers, and their expectations in terms of pricing and security Flashcards Preview

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Flashcards in The various senior debt providers, and their expectations in terms of pricing and security Deck (11)
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1

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

2

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

3

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%

4

What are the most common debt repayment structures (for instance, interest only, constant amortisation etc.)?

Repayment / amortising mortgage

Interest-only mortgage

5

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

6

What are the FOUR different types of repayment mortgage?

Fixed-rate mortgages

Tracker mortgages

Discount mortgages

Guarantor mortgages

7

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

8

What is a fixed-rate mortgage?

Your interest rate remains fixed for a set period

9

What is a tracker mortgage?

Your interest rate tracks the base rate plus a set percentage

10

What are discount mortgages?

Your interest rate tracks your lender's standard variable rate minus a set percentage

11

What are guarantor mortgages?

Your parent or family member guarantees the loan, meaning a lower interest rate or bigger mortgage