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Rebuildingsociety marketplace changes
Rebuildingsociety.com are offering borrowers a 5% discount in return for additional security.
We've been working hard to bring you good quality borrowing applications for you to consider. Currently businesses that are eligible to borrow through rebuildingsociety.com, must have at least two years history, an average turnover of £50,000 a quarter and offer at least a personal guarantee as security. The average final rate paid by borrowers on our loan book is over 20% APR*, this rate is paid usually regardless of the security offered in support of the loan.
We've listened and as lenders you want better security and borrowers tell us they want lower rates. So we're excited to launch 'loan discounts for security' e.g. A loan with a 1st charge over a property with a great LTV will receive a discount of up to 5% on their starting auction rate.
This incentivises borrowers to put up any security they may have and hopefully gives lenders a better choice of loans.
These marketplace changes are explained in detail on the blog.
The borrower can offer a wide variety of security to support their loan. We’ve assigned a nominal value to the different types of security, making some security ‘more valuable’ than others. For example a 1st charge on a property will be deemed a more valuable form of security than a company debenture, and as such they will be rewarded with a lower starting interest rate.
The more security added, the more the starting rate will be reduced* as the security added works in a cumulative way linked to the loan to value ratio.
The starting maximum rate will never be modified lower than 5% of the standard maximum rates, which are currently as follows:
- A+ = Max rate 11%
- A= Max rate 14%
- B= Max rate 17%
- C= Max rate 20%
Therefore a C rated loan will never have a maximum starting rate of less than 15%.
The security we can accept from a borrower is ranked in priority below.
- 1st Charge Commercial Property
- 1st Charge Non Residential Property
- 2nd Charge Commercial Property
- 2nd Charge Non Residential Property
- 1st Charge Residential Property
- Fixed Asset Debenture
- 2nd Charge Residential Property
- All Assets Fixed and Floating Debenture
- Corporate Guarantee
- Personal Guarantee Insurance
Therefore, depending on the LTV on the security, a 1st legal charge taken on a commercial property in support of a loan will be ranked higher than a loan with an All Assets Debenture and may be achieve a lower maximum loan rate. Similarly, based on the above a loan secured on a 1st charge non residential property with an exceptional LTV will not achieve a better rate than a loan secured on a 1st commercial charge that also has an exceptional LTV, unless the former is accompanied by additional security.