Loan Terms
The criteria below are indicative and subject to confirmation in the transaction documentation. Loans meeting these criteria areeligible to be offered for purchase; eligibility does not of itself oblige Fortacre to purchase any particular loan. Eligibility is binary: a single failed criterion makes a loan ineligible.
GENERAL
Charge - First legal charge only
Geography - England and Wales.
Products - Standard bridging and light refurbishment (Tier 1), being cost of works not
Term - 1 to 24 months. Minimum 3 months on commercial.
Interest - Retained, serviced, or part-and-part.
Exit - Every loan must have a credible, documented exit at origination. Acceptable exits are refinance to a term, buy-to-let or commercial mortgage; sale of the property; sale of alternative assets with evidence of value and liquidity; or a rebridge, case by case with clear justification.
LOAN SIZE AND LEVERAGE
Minimum loan - £50,000, £100,000 on commercial.
Maximum loan - €3,000,000 across all products. Larger loans considered by exception.
Maximum ITV, residential - 75 percent of open market value.
Maximum LTV, semi-commercial - 70 percent of open market value.
Maximum LTV, commercial - 70 percent on a 180-day valuation basis.
Light refurbishment - Maximum day-one LTV 75 percent, maximum loan to gross development value 75 percent, maximum gross loan to cost 85 percent. Build costs are funded 100 percent in arrears by staged draws against QS or monitoring surveyor certification.
Below market value - Eligible. LTV is calculated against the lower of purchase price and valuation. Where LTV exceeds 70 percent, the loan must not exceed 85 percent of the purchase price.
SECURITY AND PROPERTY
Asset types - Residential, semi-commercial and commercial. A semi-commercial asset is one where the commercial element does not exceed 30 percent of open market value. Commercial is eligible only where full residential planning consent or permitted development rights are in place.
Concentration - Semi-commercial and commercial exposure limited to 15 percent of the portfolio in aggregate.
Tenure - Freehold, or leasehold with a minimum 70 years remaining at redemption. Flying freehold accepted up to 15 percent.
Construction - Standard construction accepted. Non-standard considered case by case. Timber frame with brick skin accepted.
New build - Properties built within 10 years require an NHBC or equivalent warranty plus abuilding regulation completion certificate.
Listed buildings - Grade Il accepted where mortgageable and saleable. Grade I excluded.
Insurance - Buildings insurance in place at completion. Contractor's all-risks insurance required for the duration of works on refurbishment loans.
Searches - Search indemnity.
VALUATION
Standard - Full RICS Red Book valuation on every loan, by a valuer on Fortacre's approved panel, dated within 6 months at completion.
Basis - Open market value for residential and semi-commercial. 180-day basis for commercial. Refurbishment loans require both a day-one open market value and a post-works gross development value.
Automated valuation - Permitted on residential only, up to a maximum loan of €1,000,000, at up to 55 percent LTV on a refinance and up to 65 percent LTV on a purchase, subject to the model returning a confidence score at or above Fortacre's threshold.
Monitoring - A RICS-qualified QS or monitoring surveyor is required for all staged drawdowns, certifying works completed satisfactorily before each release.
BORROWER
Eligible borrowers - UK corporate, special purpose vehicle, LLP or individual borrowers acting for business purposes, with personal guarantees as applicable. Full KYC, PEP and sanctions screening on every party.
Adverse Credit - Assessed against the following, disclosed at the point of sale:
- clean credit: accepted;
- satisfied CC]s over 12 months old and under £2,500: accepted with evidence
of satisfaction;
- satisfied CC]s within 12 months: case by case;
- unsatisfied CC]s at origination: case by case, and inust be satisfied at or before
completion;
- historic mortgage arrears, 24 months or more and resolved, current position
clean: case by case;
- active mortgage arrears: decline;
- discharged bankruptcy of 3 years or more, with rehabilitation evidence: case
by case;
- active IVA or undischarged bankruptcy: decline;
— any fraud, at any time: decline.