* Net rental yield is arrived at by discounting the market rent by 10%; the tenant receives this discount in lieu of bearing all maintenance and repaid responsibilities. We keep 25% of the net rent paid as our revenue.
|Illustrative||Property in RG10||Property in RH10|
|Market rent (monthly)||£1200||£1250|
|Calculated rental yield||4% pa||4.6% pa|
|Starting interest||2.7% pa||3.1% pa|
|Interest in 3rd year (with inflation at 2%)||2.75% pa||3.18% pa|
Similar legal form to the 'Help to Buy' loan. They have been a feature of the mortgage market for several years and were primarily offered by house builders.
The equity loan to the purchasing company, is secured by a second charge on the property and ranks after the fixed mortgage, just like the 'Help to Buy' loan.
The tenant has a fixed five-year rental agreement and a shared interest in the property. There are no void rental periods and no agency fees.
Your loan is for a five year term and is repayable at the end of it either through refinancing or sale. You can also exit early in the secondary market.
You have full control to individually select the properties to invest in and the amount that you invest.
Both the first charge for the main mortgage and the second charge for the equity mortgage are registered with the land registry in the name of Open Access Finance Ltd (trading as OnStep), which acts as the security trustee on the loan.
The security trustee holds the mortgage security in trust for all investors on the OnStep platform. The security trustee has no economic interest in the loan and does not have any conflict of interest with lenders in relation to the security.
We own the property and administer the tenancy. The tenant remains responsible for all maintenance and repair duties, in lieu of which they receive a discounted rent.
If the tenant is in financial difficulty, we will treat them sympathetically and explore appropriate forbearance options. This will include allowing them to sell their investment in the property to generate funds.
If forbearance options are exhausted, we will work with the tenant to facilitate a sale of the property or find a new tenant in accordance with the interests of the lenders.
The contractual term for the mortgages will be for 7 years. Your loan will be repaid either through a sale of the property or through refinancing with the tenant agreeing a new 7 year rental contract.
There will also be a sophisticated secondary market in operation, which will allow you to exit your loans early.