London Credit Fund
London Credit Fund is an open-ended alternative investment fund, licensed and regulated by the Cyprus Security and Exchange Commission. The Fund invests via subsidiaries in short and medium term business loans in the UK, secured against London real estate. The target return for its Euro Investors, exceeds 4% p.a. and it’s payable quarterly. The London Credit Fund’s underlying loans are secured against London real estate, one of the most prime investment assets in the world that provides solid security and comfort to all fund’s investors.
London Credit, is a London based lender, established in 2011 which provides business purpose short term secured loans in the UK (bridging finance) to individuals and companies secured over real estate. Throughout our 9 years of operations and the facilitation of more than £100 million worth of short and medium-term loans, we have established an impeccable track record, with a 100% loan collection rate, and achieved attractive returns for our investors.
The Bridging Market
Bridging as a type of lending in the UK begun in the 1960s and it has gradually grown to become a popular funding solution which can be adapted to the specific needs of each client. A bridging lender has the advantage of speed of execution and flexibility compared to high street lenders.
Bridging follows the same principles as any other loans and lenders like London Credit follow strict rules and procedures in relation to anti-money laundering, customer onboarding and know your customer, responsible lending, credit and other checks including fraud. In bridging, the security property is of the utmost importance as it will determine the viability of the exit strategy. It is basically a temporary financing solution while transitioning to another financial arrangement. In most of the cases, interest in a bridging loan is retained and so the borrower does not have the obligation to make any payments during the term of the loan.
It is worth mentioning that currently the bridging market is in excess of 6 billion pounds Sterling and continuous to grow.
Our loans range between £100,000 which is the minimum and £3.5 million which is the maximum loan amount. We charge a rate of 9% – 11% per annum and the term is from 3 – 18 months. The maximum loan to value (LTV) is 70%, so basically the loan amount is up to 70% of the value of the property based on a recent professional valuation. All loans are secured with a first legal charge over a residential or commercial property.
Underwriting is the process we undertake to analyse all of the information provided for each loan application to assess whether or not it meets our minimum loan criteria. We evaluate the risk level and we make sure that the lending decision is in the best interests of the applicant and in line with codes of business practice.
In the UK clients (individuals or legal entities) normally request loans through mortgage brokers who are advisors authorized by the Financial Conduct Authority (FCA). Then, the mortgage brokers will contact our Business Development Managers to submit their enquiry. When an application is received, this is processed by our underwriting team.
Our experienced underwriters use electronic procedures with credit and other reference agencies like Experian, Lexis Nexis and NIVO, to verify the applicant’s identity, and check the credit scoring as well as any adverse issues. The applicant’s ID is also verified by third party professionals ( solicitors / accountants) from whom we request to confirm the ID and length of their relationship.
We will get a copy of the security property’s title from the Land registry to confirm ownership, charges and notices. We will also verify that the property is non occupied by the applicant or any related party by asking for tenancy agreements and inspecting it if necessary. We will not lend to a property that is occupied by the owner or other related party occupied or the applicant has the intention to occupy it during the term of our loan, as this will not be a business purpose loan.
The value of the security property is assessed through a valuation undertaken, within 3 months prior to the drawdown date, by one of our external Professional Surveyors who are members of the Royal Institution of Chartered Surveyors and have adequate Professional Indemnity cover. Through the valuation we also ensure that the property provides adequate security, it is of an acceptable type and structure, and that the property is structurally sound and marketable. The value of the property is also assessed internally using reference databases like Rightmove and Zoopla and our findings are compared with the valuation report.
The legal aspects of the property are checked by our external solicitors at the legal due diligence stage of the procedure and if any issues arise, these are referred to the valuer to consider whether they affect the value.
London Credit is a member of CIFAS – the UK’s largest fraud sharing database. During the underwriting process we review everything to ensure truthfulness of the information provided, accuracy and reflection of the applicant’s circumstances. Once the abovementioned procedures are completed to our satisfaction, we can proceed with issuing the facility letter and instructing our external solicitors to initiate their legal due diligence of the applicant and the property.
The exit strategy is assessed to establish whether it is viable at the time of application and that if for some unforeseen circumstance it fails to materialize, an alternative exit strategy is feasible where possible. Where the exit is refinance, we check whether the property is refinanceable through the Mortgage Brain which is an external lead generation calculation system.
Should the exit strategy be the sale of the subject property, we check whether the timescales are reasonable based on the valuers’ comments regarding marketability and whether the property needs any works. Where there is another form of exit such as repayment from an inheritance or an investment that is due to mature, specific evidence is required to support the proposed exit route.
Reasons to invest in Bridging
Bridging provides high returns, security and short term horizon. It is an investment which its asset backed by London property worth at least 133% of the investment amount and whilst it is Sterling denominated, investments can be facilitated in multiple currencies since we offer Hedging solutions of foreign exposure for certainty of capital and interest. The offered returns are significantly higher than deposit rates and it is a short – term investment with a clear exit.
We provide full transparency and the client (i.e. the investor) can have access to any documentation in relation to the loan like the External property valuation, the Report on title and Land Registry, the Legal charge and the Property insurance policy.
Marios Theophanous – Head of Underwriting
Andreas Chr. Christoforou – Legal Advisor