Invest in

Auto-Invest - Cautious

Interest paid
5% p.a.*

HCAI-CA

Auto-Invest Cautious

Summary

  • 5%

    Cautious

    Target Rate (p.a.)

  • Avg. Loan-to-value (LTV) in Bridging Loans or Gross Development Value (GDV) in Development Loans

    60%

  • Maximum LTV or GDV

    65%

  • Minimum Investment

    £1,000

  • Minimum Term

    12 months

  • Notice For Withdrawal

    30 days
    (subject to normal market conditions and minimum term)

  • Type of Loans

    Bridging and Development

  • Diversification

    Diversified across all suitable Peer-to-Peer Bridging and Development loans fitting the product criteria, as far as practical

  • Security

    Registered Legal Charges

  • Tax Efficiency

    SIPP and ISA eligible

  • Location

    UK

When lending against a property we lend up to a certain ‘loan to value’ (LTV) for bridging loans and ‘loan to gross development value’ (LTGDV) for development loans and secure the loan with a legal charge against the property. 

With the Cautious product we lend up to a maximum 65% LTV against the security with an overall average of not more than 60% LTV across the loans in that product (considerably lower than the LTV in a traditional Buy to let Mortgage).

This means in the event of the borrower not repaying and the security needing to be sold, we have a greater chance of recovering investor monies owed as opposed to a loan with a higher LTV/LTGDV.

What does that mean?

You might not make as much interest as the other Auto-Invest products – Balanced and Bold – but it serves to provide greater downside protection against a fall in the property’s value. 

Whilst the Cautious product has the lowest risk of our three Auto-Invest products, it is important that you understand your capital is still at risk.

Our Auto-Invest model means that:

You have greater choice: You can choose a level of risk and reward that appeals to you with target rates from 5% - 7% p.a. depending on the level of risk you are willing to accept.

You will receive regular interest payments: Interest will be either be paid twice a year into your nominated bank account or compounded.

You can compound your returns: You can roll up and re-invest your interest, if you choose, thus increasing your overall return.

Your risk is mitigated: Your capital will be spread over many different loans so if one goes into default it is only a fraction of your overall investment.

Peace of mind: You should not be affected by delays to developments as you no longer have to wait for the properties to be sold to recover your capital or be paid interest.

Greater liquidity: You will be able to request the return of all or part of your funds on 30 days’ notice, under normal market conditions, following a twelve-month minimum term.

Invest Tax-Free: You can invest up to £20,000 p.a. via our Innovative Finance ISA and earn up to 5% p.a. tax-free (UK residents only).  Please note that ISA investments can only be made by bank transfer.

Please note if you had a tax year break with regards to your ISA subscription with us (e.g. you invested in the 2017-18 tax year but not in the 2018-19 tax year) you are required to re-declare that you are eligible to invest in an ISA.  You will be sent an email asking you to re-declare that you must respond to or your investment may be liable for tax.

** We accept ISA Transfers **

We accept ISA transfers from other ISA managers. To transfer your existing ISA please follow these steps:

1. Log in to your account
2. Click 'My portfolio'
3. Click 'New ISA transfers' button
4. Select which ISA type you would like to transfer into our IF ISA
5. Follow instructions to completion

As part of the transfer process, we will contact you and ask you how you wish your funds to be invested, as you can split them across any combination of the 3 Auto-Invest products, noting that any one investment cannot be lower than £1,000.

ISA Transfer Fees:

There is no fee for a transfer from another ISA manager for amounts of £5,000 and over. For amounts lower than £5,000 there is a £50 admin fee which will be deducted from the amount transferred over.  There is a minimum £1,000 amount that you can transfer over, before fees. Transfers in do not need to be in £1,000 increments, so you can for instance transfer in amounts such as £5,261.55.

Please note: all returns quoted are target returns only. No returns are guaranteed. Your capital is at risk.

Recovery scenarios if a loan is not repaid on time:

Example: The property is valued at £1,000,000 and we lend based on 60% LTV, which is a £600,000 gross loan. The borrower defaults on the loan and the property has to be sold. What happens to your investment?

Scenario 1: If the property is subsequently sold for £1,000,000 investors would receive all capital and all owed interest.

Scenario 2: If the net sale proceeds (after all fees including receivers and legal fees) is £700,000 investors would receive all your capital and the appropriate amount of interest (5% p.a.)

Scenario 3: If the net sale proceeds (after all fees as above) is £600,000 investors would receive all capital back but no interest.

Scenario 4: If the net sale proceeds (after all fees as above) is £500,000 you would initially receive 5/6 of your capital and no interest. That means the net proceeds of the sale have to be less than 60% of the RICS valuation before you would lose even a fraction of your capital. Please note however, we would as a rule pursue the borrower for any outstanding monies owed.

The key to sensible investing is to decide how much risk you are willing to take and base your decision as to which product(s) to invest in. This is why we have created the 3 product categories of: Cautious (5%) Balanced (6%) and Bold (7%). The higher risk you are prepared to take on, the higher your returns.

It is important that you appreciate your capital is at risk.  Please familiarise yourself with our risk warning.

  • 5%

    Cautious

    Target Rate (p.a.)

  • Avg. Loan-to-value (LTV) in Bridging Loans or Gross Development Value (GDV) in Development Loans

    60%

  • Maximum LTV or GDV

    65%

  • Minimum Investment

    £1,000

  • Minimum Term

    12 months

  • Notice For Withdrawal

    30 days
    (subject to normal market conditions and minimum term)

  • Type of Loans

    Bridging and Development

  • Diversification

    Diversified across all suitable Peer-to-Peer Bridging and Development loans fitting the product criteria, as far as practical

  • Security

    Registered Legal Charges

  • Tax Efficiency

    SIPP and ISA eligible

  • Location

    UK

Documents

Below are the documents that comprise the Investment Pack for Auto-Invest - Cautious (HCAI-CA). Before investing, please download and read all of the below documents. Please remember, your capital is at risk.

Auto-Invest Options

3 simple options for Risk & Reward

 

5%

Cautious

Target Rate (p.a.)

6%

Balanced

Target Rate (p.a.)

7%

Bold

Target Rate (p.a.)

Avg. Loan-to-value (LTV) in Bridging Loans or Gross Development Value (GDV) in Development Loans

60%

70%

75%

Maximum LTV or GDV

65%

75%

80%

Minimum Investment

£1,000

£1,000

£1,000

Minimum Term

12 months

12 months

12 months

Notice For Withdrawal

30 days
(subject to normal market conditions and minimum term)

30 days
(subject to normal market conditions and minimum term)

30 days
(subject to normal market conditions and minimum term)

Type of Loans

Bridging and Development

Bridging and Development

Bridging and Development

Diversification

Diversified across all suitable Peer-to-Peer Bridging and Development loans fitting the product criteria, as far as practical

Diversified across all suitable Peer-to-Peer Bridging and Development loans fitting the product criteria, as far as practical

Diversified across all suitable Peer-to-Peer Bridging and Development loans fitting the product criteria, as far as practical

Security

Registered Legal Charges

Registered Legal Charges

Registered Legal Charges

Tax Efficiency

SIPP and ISA eligible

SIPP and ISA eligible

SIPP and ISA eligible

Location

UK

UK

UK

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