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6. Managing your investments
Can I automatically withdraw the income (sometimes referred to as interest or return) I earn?
Yes. Enable the ‘manage your income’ feature in your online account and select ‘Withdraw’ from the three options available. Once you have accrued £100 or more of income, it will be automatically transferred to your nominated bank account.
How does the investment contract work?
By investing via our online platform you are investing in an alternative investment fund (AIF). Your income is in the form of a receivables participation. It entitles you to receive payments from LendInvest out of the payments that LendInvest receives from the borrower of the loan you have chosen to back.
Participating in this sort of investment does not involve you taking on any obligations to the borrower or to the property. You have no contact with the borrower. Instead, our experienced team deals with the borrower, including all handling queries, repayments, extensions or recoveries.
What happens if a borrower decides to pay back a loan early?
If a borrower repays early, LendInvest will return capital with any remaining income due to investors on the same day.
While the loans are provided with a fixed term, the loans are flexible and permit borrowers to repay before the end of the term. As a result, many loans are repaid early. In these cases, we notify investors by email on the day of the early repayment so that investors can manage their cash positions.
A loan I have invested in is labelled “on schedule”. What does this mean?
This means that this loan is being serviced as normal and the income for your investment in the loan will be paid in the normal payment cycle. If the borrower of the loan misses one interest payment, the loan will still be classified as on schedule while our loan servicing team works with the borrower to bring payments back up to date.
A loan I have invested in is labelled “extended”. What does this mean?
This means that the borrower of the loan has requested an extension to their final repayment date and our underwriters have agreed to that request following a full credit risk assessment. In these cases, while the original repayment date has been extended, the borrower is continuing to pay the required interest payments as normal.
Here are some typical reasons why a borrower may ask for an extension:
- Planning applications have taken longer than expected to obtain.
- Refurbishment works have been unexpectedly delayed.
- The borrower is waiting to exchange on contracts where a sale has been agreed.
- The borrower requires additional funds and/or time to complete his project.
- The borrower is waiting for a new lender to complete their due diligence before refinancing the loan.
- The buyer of the borrower’s property pulls out at the last moment.
We aim to notify investors at the earliest possible time of approved extensions. However, at times, the extension request may be made with very little notice (eg if the borrower’s sale falls through at the last minute).
If a loan in which you have invested is extended, we will send you an email when the extension is granted and this will include a reason for the delay.
A loan I have invested in is labelled “in arrears”. What does this mean?
This means that the borrower has failed to make two or more interest payments. When the loan is in arrears, we will be working closely with the borrower to recover missed interest payments and get the borrower back on track. When the borrower makes up their interest payments, the loan will be returned to “on schedule”.
A loan I have invested in is labelled “out of term / in breach”. What does this mean?
This usually means that the scheduled loan term has ended, but the borrower has not repaid the principal loan amount and an extension to the loan has not been approved. On other occasions, the borrower may have breached some of the conditions of their agreement with us; for instance, making an unauthorised change to the nature of the underlying property. In either case, our loan servicing team will work closely with the borrower, looking at their individual circumstances to work towards the most appropriate solution.
A loan I have invested in is labelled “enforcement”. What does this mean?
This means that enforcement action (legal or repossession proceedings) has started to recover the outstanding debt owed by the borrower. It is the final course of action we will take if a borrower has continually failed to make interest payments or repay the principal loan amount.
Income is not paid to investors during the enforcement period, but it will continue to accrue. When the enforcement process has completed, we will apply the proceeds of enforcement in the order set out in your receivables purchase agreement, a copy of which you can find in your online account. The process may take six months or longer to complete.
If, after realising the proceeds of the sale of the property, there remains a shortfall balance, we will seek to recover this from a personal guarantor (if applicable) or pursue the borrower or the borrower’s directors through our loan servicing team. If this occurs, we will regularly update you with our progress.