It goes without saying that any investment comes with risks unless you take proper considerations. Loan notes are nothing but an interest-bearing promissory note to invest in the property. It denotes the borrower’s name and addresses with the capital loan, lender’s details, the term, interest rates, including the terms and conditions. Property lone notes are quite beneficial to get the highest interest rates in the alternative investment market. Still, before you step forward, you should know whether it’s safe or not! Everything about property loan note investment As said, every investment plans involve a few risks. So, while thinking of investing in property loan notes, you should be aware of its security tips and risks. Such as: Security types of Loan notes The funds of property loan notes go to the companies referred to as Special Purpose Vehicle (SPV). Throughout the investment term, investors own a first legal charge in the form of a debenture over the company’s assets. In most cases your legal charge is protected by an FCA regulated Trustee that will act as a referee throughout the investment term. In the unlikely event of a default on payment to investors, the Trustee should have the legal right to cease the developers’ assets on behalf of the loan note holders. Such ring-fencing keeps the investor’s capital safe! Corporate guarantees The property developers should ensure that their property assets can always pay back the investors’ capital in a default situation. In most cases, they provide corporate guarantees to the loan note holders during investment term. Loan note security Loan notes can provide the heist level of security against specific properties or land. The loan notes are secured with a first legal charge over the companies floating assets. Risks involved in property loan notes During property investments, loan notes have risks, even while providing the highest level of security. For example:
Do you need any help? Well, if you want guidance for safe decision-making to invest in the property and avoid risks, count on Triumph Towers! It’s the leading alternative investment company specialising in Property Loan Notes. Head over to triumphtowersinvest.com for more details!
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