Typically a loan that has been approved for extension will be extended for up to three months. Occasionally, we may approve a loan extension for as long as six months if we are very confident of the borrower’s reason for extending, track record and ability to repay on time.
When we agree to extend a borrower’s loan, this will be indicated in the loan’s activity tracker on an investor’s platform. The status of the loan remains ‘On Schedule’.
Once a loan has been extended, however, it is treated just like any other loan in the LendInvest loan book. Our loan servicing team will stay close to the borrower, ensuring that they continue to make regular monthly interest payments and their exit strategy stays on track. In other words, if we think that the borrower of an extended loan needs extra monitoring then this will be put in place when the extension is granted.
While loan extension requests are common practice in professional property finance lending, we encourage borrowers to avoid them wherever possible. After all, as a lender, we are under no obligation to approve a request if we are not confident that it is the best option for the borrower and our investors.
Around 30% of borrowers will request an extension during the term of their loan. In the majority of cases, one extension is enough to help a borrower get back on track and complete their project. However, occasionally a borrower will apply for a second extension. All of these cases are handled on a case-by-case basis and will only be approved if our Head of Credit considers it to be the best course of action to ensure the full repayment of the loan in due course.