Bad Debt Rates

At Invest & Fund, we are committed to providing a transparent service to our Lenders to enable them to make an independent, well-informed decision about lending via our platform.

Alongside disclosure of our credit assessment for each individual loan that is posted on our marketplaces, we are committed to informing our Lenders about the bad debt performance of the property loans that have been funded via our site.

A Borrower’s loan agreement includes clauses describing a whole range of potential events which may constitute a default. These can range from technical defaults such as annual accounts not being provided within stipulated timescales, to payment default or, more seriously for example, the facility not being repaid by the expiry date which could potentially result in a bad debt. A bad debt is where the funds realised from all of the security held are insufficient to repay the borrowing. A potential bad debt is where the current level of borrowing is greater than the up to date value of the security held.

Should there be an event of default, the severity, including the coverage of the loan against the security, will be considered when deciding upon the most appropriate course of action. Available actions may include; issuing a permanent waiver (e.g. Invest & Fund accepting that whilst a breach of the original terms has taken place it is appropriate in the circumstances to waive that term), or a formal default being called which could ultimately lead to a demand for repayment and recovery action, should the event of default not be satisfactorily addressed following an appropriate period of forbearance. Therefore, an event of default will not always lead to a bad debt and the severity of the event and the level of security cover held both need to be taken into account in determining a course of action.

As Invest & Fund loans are secured against property we believe it is useful for our lenders for us to monitor:

  • potential bad debt rates as this is considered an accurate indicator of loans where the current level of borrowing is greater than the up to date value of the security held, measured borrower by borrower; and
  • bad debt written off as this reflects loans where there have been unrecovered lender losses.

Bad Debt Rates

Date of last update: 30th Sept 2018

Origination Year
(Hover over titles for description) 2014 2015 2016 2017 2018 2019 on
Potential bad debts 0% 0% 0% 0% 0% 0%
Bad debts written off 0% 0% 0% 0% 0% 0%
Expected capital loss from defaulted loans (blended rate) Nil actual Nil actual Nil actual 0.237% 0.292% 0.278%

The figures shown in the table above represent weighted averages across all of the loans originated via the Invest & Fund Platform in a calendar year and do not reflect a loan by loan assessment. ‘Expected capital loss from defaulted loans (blended rate)’ is a forecast and is not an indicator of future results, so in the event of an economic downturn and/or higher interest rates and/or reduced market liquidity or a combination of these and other factors the capital loss rates could be much higher.

Before making a lending decision, Lenders should ensure they have reviewed sufficient information to ascertain the legal, financial, tax and regulatory consequences of a loan, to enable them to make an informed decision.

For further information on our default procedures please see our Lender FAQ section.

If you have any further questions on the figures above please contact us.