Close risk warning

As with most forms of investment, peer-to-peer lending carries a degree of risk to your capital; in this case, if the borrower is unable to repay their loan. At Assetz Capital, we seek to reduce this risk to our investors by taking asset security on every loan, with the added benefit of a discretionary Provision Fund for some of our investment accounts. Investment Account target interest rates should be considered along with the relevant Investment Account expected defaults & losses information. Past performance does not guarantee future performance. We recommend that prospective lenders read the Key Investor Information pages before investing.

The Property Secured Investment Account

5.50% p.a. target loan interest*

Credit Awards Best Peer-to-Peer Lender 2016 defaqto 5 star - peer to peer lending 2016
*

Interest is quoted gross and is capped at the quoted rate although actual returns could be lower. Target interest rates should be considered along with the relevant investment account expected defaults and losses. Past performance does not guarantee future performance. This is an investment in peer-to-peer loans - it is not a bank account. Capital is at risk.

Breakdown

Property Secured Investment Account
Target interest rate 5.50% p.a. target loan interest*
Who do you lend to? Business borrowers who provide UK property security for a loan and having modest loan to values where there is no loss expected (please see below)
Investment of funds Automatic as new loans are released
Provision fund Yes
Diversification Automatic
Access to your money No fee for withdrawals, although this may change in the future with notice provided at that time. Exit possible subject to demand from other investors, otherwise you will receive your interest and capital in accordance with the terms of the loans held within the account which typically would be from six months up to five years.
Notice period None
Invest from £1
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Target
interest rate
Who do you
lend to?
Investment
of funds
Provision
fund
Diversif-
ication
Access to
your money
Notice
period
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from

Quick Access
Account
3.75% p.a. target loan interest*
British businesses with realisable security Automatic as new loans are released Yes Automatic No fees for withdrawals and with very fast access to funds under normal market conditions. None £1 Start Investing

30-Day Access
Account
4.25% p.a. target loan interest*
British businesses with realisable security Automatic as new loans are released Yes Automatic No fees for withdrawals and access to funds after 30 days' notice, in normal market conditions. 30 days £1 Start Investing

Great British Business Account
7.00% p.a. target loan interest*
British businesses with property security available Automatic as new loans are released Yes Automatic No fee for early withdrawal – exit possible subject to demand from other investors. Otherwise you will receive your cash back over the term of the loans held within the account which could be over a period of up to five years. None £1 Start Investing

Green Energy Income Account
7.00% p.a. target loan interest*
British business with property security available Automatic as new loans are released Yes Automatic No fee for early withdrawal – exit possible subject to demand from other investors. Otherwise you will receive your cash back over the term of the loans held within the account which could be over a period of up to five years. None £1 Start Investing

Manual Loan Investment Account
5.50-15.15% p.a. gross
Any of our secured loans with available units – your choice Manual but with ability to target specific loans automatically No Manual Partial or full redemption possible via the Aftermarket, subject to demand from other lenders – no fee. None £1 Start Investing
*

Interest is quoted gross and is capped at the quoted rate although actual returns could be lower. Target interest rates should be considered along with the relevant investment account expected defaults and losses. Access times relate to withdrawals in normal market conditions but cannot be guaranteed. This is an investment in peer-to-peer loans - it is not a bank account. Capital is at risk.

All rates are quoted gross, before allowances for tax or any possible losses. These rates of return are currently available to investors on the Assetz Capital platform.

What is the Property Secured Investment Account?

The Property Secured Investment Account (PSIA) is a way to invest exclusively in property backed loans designed to help you spread your risk across a broad range of autodiversified loans.

Every single loan considered for this account is automatched or rejected upon the basis of the level of property security that it offers. The loans automatically selected for investment by this account are only those that have no expected loss in the case of that loan defaulting in the future, even after any estimated recovery costs.

There may well be additional types of security that we take for these loans such as Personal Guarantees from the borrower but this is not factored in to the calculation of the property security required for this account and is in addition to that. This approach to security is intended to provide significant protection in the case of a loan default where the security would need to be resold to get back the loan capital. In addition the account has the added protection of a discretionary Provision Fund, principally to cover recovery costs for any defaulted loans but also in case any security for loans differs very substantially from the independent valuer's expectation at the time of any recovery. We have sought to make this the most rigorous selection of loans and of their security of all of our Investment Accounts.

The Legal Bit

Why invest in the Property Secured Investment Account?

The Property Secured Investment Account (PSIA) allows investors to invest automatically in property backed loans that always take land or property security that substantially exceeds the loan value. All loans have also passed Assetz Capital's strict credit checks that assess loan affordability and likelihood of the loan being repaid at the end of the term. For loans to be eligible for this account they must have no expected loss in case of a default, even after recovery costs. This does not mean losses are not possible on loans within the account but rather that they are unlikely in normal circumstances and based upon the independent valuer’s opinion and even after a substantial reduction in the security value caused by the quick sale of the security in order to recover the loan capital, and also after payment of recovery costs.

Property is one of the most tangible types of security available when lending and historically has always offered relatively sound protection for lenders in bad economic times. In good times the security can also grow in value, potentially making a loan more secure as the value of the security increases. In addition, many property assets produce income in the form of rent and this can provide income even if a loan defaults, prior to disposal of the property.

The PSIA offers a target, capped interest rate for investors of 5.50% gross per annum (before tax and any loan losses). This rate varies, so any rate changes will be announced at the start of each month.

This account also benefits from a separate, discretionary Provision Fund.

Property Secured Investment Account

How it works: Property Secured Investment Account details

  • The PSIA offers a capped, target lender return for investors of 5.50% p.a. gross (before tax and any loan losses and protected by a discretionary Provision Fund).

    Please note that you could receive less than this rate of return, and possibly a loss of capital, if the PSIA's Provision Fund were exhausted and then loans were to default or borrowers were no longer able to repay their loans and the property security was found to not cover the outstanding loan capital, outstanding interests and other costs of recovery. We seek to mitigate this risk by cautious levels of lending against carefully assessed independent valuations.

  • The minimum investment into the PSIA is £1 and there is no maximum, subject to loan availability.

  • Included in the PSIA are business loans that are secured with legal charges over land or property. In addition, these loans may also benefit from security taken over machinery, invoices, company assets, debtor books, other realisable assets and/or a personal guarantee from the business owner, however any of this extra security will be ignored for purposes of the primary Loan to Value protection required from the land or property security described below.

    The PSIA will automatically diversify your account funds across many matching loans at any given time, with the aim of doing so in an equal and proportionate way, subject to loan availability. For example, if 50 suitable loans are available, the PSIA will aim to invest approximately 2% of account funds into each loan. Likewise, with only five suitable loans, the PSIA will aim to invest approximately a fifth (20%) of account funds into each loan.

    Please note that in situations where the number of loans matching the account criteria is low, diversification is only possible across the matching loans – this may mean that the actual extent of the automatic diversification may be limited unless/until new loans become available. In such a scenario the percentage invested in any one loan may rise.

    The maximum loan-to-value (LTV) ratio for individual loans eligible for automatic selection for this account depends upon the type of loan. The table below contains the current selection criteria:

    First Charge Business Loans
    Maximum LTV
    First Charge Property Development Loans
    Maximum LTV*
    2nd Charge Business Loans
    Maximum LTV
    Commercial Property 67% 70% 57%
    Industrial Property 60% 70% 50%
    Residential Property 67% 72% 57%

    *Property development loans use the finished development valuation for this calculation however the amount that the borrower can receive in their first drawing under the loan is limited to a maximum of 95% of the initial (pre-development) land valuation.

    These criteria are designed to allow for recovery costs of a defaulted loan and also the relative risk of each type of loan with the aim of ensuring that any defaulted loan in this account has a substantial expectation of recovering all of its capital after recovery costs.

    What’s more, by investing in the PSIA, your money helps to boost the UK economy by supporting the growth of carefully vetted British businesses, as well as earning a fair, risk-adjusted return.

  • Normally interest (income) is earned and paid monthly. However, due to the nature of a limited number of loans that may qualify for the PSIA, the interest payable on the loan may only become due for payment at the same time as that loan is repaid. You will also receive capital repayments from time to time, based on loans' contracted repayment dates (their due dates for repayment). Interest and repayments can be automatically reinvested if you choose (see below).

  • All PSIA investments will benefit from automatic inclusion in a separate, discretionary Provision Fund intended to help to protect investors from income delays or income and/or capital losses within the PSIA. Any loan interest paid by borrowers that is above the 5.50% target rate for this account, minus any contractual fees due to Assetz Capital, will be used to fund the Provision Fund.

    For other Assetz Capital investment accounts, the Provision Fund targets a cash balance of up to 4 x the Expected Loss on the total loan book investments at any one time. However, with expected losses expected to be zero in the PSIA (see below), the Provision Fund will essentially be used to ensure a prudent balance of cash is available in order to aim to fund any loan recovery costs without recourse to lenders invested in this account.

    As with our other investment accounts, we will regularly publish the size of the Provision Fund protecting the PSIA. The Provision Fund seeks to protect against any potential capital losses if, in the event of a loan default, the security taken on that loan does not cover the outstanding balance owed although, as mentioned above, the design of this account is aimed at achieving no expected losses on individual loans at the time of the first loan drawdown by limiting the maximum loan to value of loans in the PSIA.

    For a loss to occur it would require property prices to fall more than they did in the last recession (the worst fall in 100 years). However, because the falls reported in 2009 were average figures it means that some properties fell by a larger value. There will always be cases where larger falls occur but they will be small in number. So while we expect no expected losses in the PSIA we are also aware that it is a possibility, however remote that a small number of loans might cause a loss. This is why we have put in place a provision fund to prepare for the unexpected.

    For more details, please see the main Provision Fund page.

  • At Assetz Capital, we take realisable asset security on all loans, with a view to protecting our clients' investments. Unlike lightly secured or unsecured lending, we don't just rely on personal guarantees. Instead, we take charges over property, equipment and other assets worth considerably more than each loan. This security and the above-mentioned Provision Fund help to reduce the potential for investor losses.

    Nonetheless the principal focus for all PSIA eligible loans is that they are always secured against land or property, with security taken to ensure that the risk of capital loss is reduced as far as practicable. We principally do this by ensuring that the expected loss in the case of a default is zero by ensuring that loans are modest versus the security offered. In addition to these minimum levels of property security, we may also take other types of security as additional security however these will not form part of the loan-to-value calculation for this account. Whilst we are principally concerned with the value of the land or property over which we take a charge we are also concerned with the 'exit route' for the loan where it may be refinanced by another lender at or before the end of the loan term, and by any rental income from the property and its ability to service the debt and by any other sources of income or capital from the borrower that can provide this exit or debt servicing. We also look at the value of land or property following any development or other works that may be paid for by our loan and monitor these works if appropriate.

  • It is quick, simple and straightforward to fund your PSIA : you simply move money into and out of your account by bank transfer. Using 'faster payments', this service should be almost instantaneous, but other transfers can take up to three working days. There is no minimum transfer amount for bank transfers.

  • Within your Loan Dashboard, you can choose to set your account to automatically re-invest interest income and capital repayments back into your PSIA (if it is still open for new investments). Alternatively, you can transfer this cash into your Cash Account for investment in other loans or Assetz Capital Investment Accounts

  • Investors can exit loans early via our Aftermarket, subject to demand from other investors at that time. Via this Aftermarket and at your request, the PSIA will aim to sell part or all of your investment at any time, subject to continued demand for these loans from other investors.

    What's more, you have the ability to add to or reduce your investment in your PSIA. After your initial purchase, if you would like to increase or decrease the amount invested, then you may do so, subject to availability and demand. When changing your investment level in your account, the PSIA will aim to continue to automatically balance your loans, so as to maintain diversification.

  • Via your Loan Dashboard, all of your Assetz Capital investments can be tracked, monitored and managed through our comprehensive and market-leading portal.

    In addition, you can invest directly in the underlying loans that the PSIA invests in, subject to the availability of these loans in the Aftermarket, but without the protection of the Provision Fund. You can do this by using the Manual Loan Investments Account (MLIA) and directly selecting these individual investments. Without the protection of the Provision Fund, these manually selected loans may deliver higher or lower net returns after any losses than the PSIA.

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