Investors Risk Statement
EstateGuru Marketplace Ltd. ("EstateGuru") operates an electronic system in relation to lending (the "Platform"), which enables investors to enter into peer-to-peer loans with borrowers.
Where you enter into a loan on the Platform, your capital is at risk. While we take steps to mitigate this risk to our investors by taking security on every loan, you may not get all, or any, of your money back. Each loan contract is entered into between each investor and borrower of the loan and EstateGuru will act as agent on behalf of the lenders in relation to the relevant loan contract (“Loan Investments”).
While there are a number of risks associated with investing, we believe the biggest risk to your return is the borrower’s ability to make their loan repayments. Our project selection processes are key in our approach to protecting your investment against market risk.
When you invest through the Platform, your money is lent to carefully selected borrowers seeking finance. However, please read and make sure you understand the associated risks with your investment, detailed below.
- Your money is at risk. Your capital is at risk and you may not receive back all (or any) of your investment. The ability to recoup all the capital and interest on these loans is determined by the ability or willingness of the borrower to and the underlying value of the asset (which could be affected by a material downturn in the property market). As such, we can’t guarantee that you will get your capital back, or receive your interest. While the loans are secured against the assets of the borrower, this does not guarantee repayment of your loan (including any interest) as per your loan documentation. You should therefore never invest more than you are willing to lose.
- Your investment is not FSCS protected. It’s important to know that your investment is not covered by the Financial Services Compensation Scheme (FSCS). Your capital and interest are at risk.
- Your portfolio risk. Any loans entered into by you on the Platform should only be made as part of a diversified investment portfolio that includes a mix of illiquid and liquid assets. Investing small amounts in multiple investments will help you spread your risk. The majority of your investments should consist of liquid asset classes, so that you can access your capital more easily.
- Property market fluctuations. The property market is cyclical and values may go up or down depending on a range of issues, including political, economic or social. Historic performance of the property market or a particular property is not a reliable guide to future performance. A future downturn in the real estate market could severely adversely affect the ability of a borrower to repay the loan you make on the Platform.
- Illiquidity. Loans made through the Platform are an investment. Your investment will be illiquid, meaning that once your invested funds are used to enter into loans it may be difficult to easily exit your investment and get your money back. There is also no guarantee that you will get your money back at the end of the term of the relevant loan in the event that the borrower is unable to repay.
- No advice. EstateGuru and its affiliates do not provide any advice or recommendation in relation to any investments made available on the website. If you have any doubts about the risks of such investments or you otherwise require financial advice, you should seek advice or recommendations that are personal to your circumstances from a suitably qualified financial adviser.
- Tax is your responsibility. You should be wary of any tax obligations that might apply to you as a result of any interest received on loans entered into on the Platform. Whether and how any relevant tax obligation applies depends on your individual circumstances. You are strongly advised to consult with appropriately qualified tax professionals regarding your individual tax position, which depends on your personal circumstances and may be subject to change in the future.
- The Security Trustee will pursue any missed payments or defaults on your behalf. The Security Trustee will pursue any missed payments and hold any relevant security on your behalf. If necessary, the Security Trustee, will enforce security and try to recover what’s owed to you. If a loan goes into default we will move it to the DEFAULT LOANS page on our website and provide an update under the “loan update” section to make you aware of the default. Please note that even if the Security Trustee enforces security on your behalf, you may not get your money back.
- We conduct thorough due diligence. We carefully examine three important criteria:
- the asset: we conduct thorough due diligence on the underlying assets – including an independent professional valuation for each asset we take as collateral;
- the borrower: we conduct in-depth analysis of each borrower’s financial position, assessing their credit history and undertaking comprehensive identity , AML and fraud checks; and
- the exit: we assess each borrower’s ability to pay back the loan.
- We only make ‘conservative’ loans. All loans are secured against physical assets at a maximum ‘loan to value’ ratio of 75%, and an average of 58% – giving you a substantial cushion of at least 42% should the value of the property fall.
- We keep your money separate from ours. We’ll do our best to ensure your money is always at work. But any money that hasn’t yet been allocated to loans will be held in trust within a segregated ‘client money’ bank accoun In the unlikely event of our insolvency, this money would be inaccessible to us. Any security over the borrower’s assets is also held on trust for you. We are subject to regular compliance reporting and checks, but in the unlikely event that we should cease trading for any reason, we are required by the Financial Conduct Authority (FCA) to hold additional capital for an orderly wind-down, so as not to disadvantage our customers.
- A security trustee will hold security on your behalf. Should EstateGuru cease to trade, any security held on your behalf would continue to be managed by a Security Trustee and a third‐party Loan Administration provider. All loan contracts are directly between a borrower and a lender (investor) and the security is held on trust by the Security Trustee. XX will act as security trustee on behalf of lenders in relation to any security held in respect of a loan and will also enforce any security on behalf of lenders.
- First-come, first-serve basis. We treat all of our customers fairly and don’t favour new customers over old. We deal with all requests to deposit or withdraw money on our platform on a strictly first-come, first-served basis.
- We make sure that operations will continue even if EstateGuru were to stop trading for any reason. In the unlikely event that we should cease trading for any reason, we make sure that our loans are administered in a way that ensures the arrangement fees payable in relation to these loan contracts are sufficient to cover the costs of administering them during any winding down process. Contingency plans are in place for a third-party administrator to take over administration of the loan parts for investors should it become necessary for any reason.