OFF3R Partner, Bridgecrowd provide loans secured over UK property by a 1st or 2nd charge. Through bypassing banks and connecting through technology, they facilitate real people to make real decisions about bridging loans and benefit from better than market rates all secured over UK property.
In this article the Bridgecrowd team provide an overview of the options available through their secondary market for those investors looking to sell their loans, whether this be in part or in full.
Bridgecrowd’s Secondary Market Principles
Bridgecrowd’s secondary market runs on a number of principles. Investors can sell loans in part or in full, with or without a discount:
Rules for sellers:
- You can sell your investment in part or in whole and your investment may be bought in part or in whole.
- Loans can only be sold after one month of the loan has elapsed and up to one month before the expiry of the loan.
- Loans can be sold at face value or at a discount in whole or in part.
- Interest will stop accruing from the date you put the loan up for sale until the date that it is sold, redeemed or cancelled.
- Loans can be sold at or above the platform minimum of £5,000.00 or your loan allocation (whichever is smaller).
Why these rules?
Principle 1: Secondary market will become available after the first month of a new loan. Reason: They want to deter investors from just grabbing loans without doing due diligence and are attempting to “hog” an allocation and then immediately selling them on if they do not like them thereby creating unnecessary admin.
Principle 2: Should you wish to sell your investment you will stop earning interest from the date the loan is up for sale. You can also sell your loan at a discount. Reason: They are trying to find the balance between allowing a secondary market to function for those that require capital back urgently.
They want investors to have some security that the secondary market can be used to retrieve their capital back should they need cash quickly. In trying to strike the right balance they have also had to pay attention to the following factors.
(i) The imposition of a secondary market (without a deterrent of lost interest) will immediately increase liquidity in the platform as some investors may seek to sell loans prior to the loan term end. This would mean that there is less liquidity for new loans. It follows that the platform may require a substantial amount of new investors and this would potentially increase marketing and admin costs for Bridgecrowd, which could lead to lower returns for investors.
(ii) the loan terms are relatively small (6 months to 1 year) and are not long term investments, therefore investors that require a secondary market in order to retrieve capital after such short period are probably not suitable investors in the platform.
Bridgecrowd’s Secondary Market Overview
- Anyone can invest in loan parts for sale on the secondary market as long as they have enough available credit on account.
- These can be purchased at the platform minimum (currently £5,000.00) and increments of £2,500.00 above this.
- This is only not true when the remaining investment is less than the platform minimum, for example; an investor can invest £3,000.00 if the loan part available is £3,000.00. Or £5,500 can be invested when only £5,500 is available.
- Investors can sell any amount of loan part above the platform minimum, for example £5,000.01 or £10,500.00
Please visit BridgeCrowd to view all their latest opportunities. Your Capital is At Risk.
Bridgecrowd is the social way to borrow and lend secured money on bridging loans. Through crowd funding they aim to offer more attractive borrowing rates on bridge loans than traditional bridge loan funding organisations, whilst potentially providing a return for their investors. The Bridgecrowd is not covered by the Financial Services Compensation Scheme. Your capital is at risk.