For investors seeking a higher rate of return, who have the capability of performing their own due diligence, bearing risk with no automatic diversification, then a Saving Stream investment may be worth researching.
Saving Stream have experienced their second default in history this past week. They are in the process of recovering the debt. More below.
Stats
*statistics correct at time of publication (06/16)
Total amount lent: £139,866,370
No. investors: 8,699
Security held: £192,545,000
Live loanbook: £105,528,063
Provision fund: £2,110,561
Provision fund is maintained at a level where it can cover 2 per cent of live loanbook at any time. This is correct given current live loans and provision fund figures.
In default: £1,599,892
No. investors affected: 1058
The Saving Stream investment process
For clarity’s sake, it should be noted that Saving Stream’s parent company Lendy Ltd manages the loan origination process, ensuring that the security meets the stipulated LTV requirements.
Loan portfolio vetting
1. Lendy Ltd vets property borrower loan applications.
2. Accepted loans are secured with a legal charge on a borrower’s asset as valued by professional Chartered Surveyors.
3. A portfolio of loans are listed for browsing – loan to value ratios will not exceed 70 per cent the Open Market Value of the borrower’s property securitizing the loan.
Manual investing
4. Investors manually select the loans they wish to invest in, conducting their own due dil.
5. Invest £100 + and agree loan specifics between investor and borrower.
6. Investor starts earning 12 per cent per annum immediately, with interest being paid monthly and initial investment repaid at end of term (loans typically repaid circa 6 months).
Saving Stream's loans
*statistics correct at time of publication (06/16)
Liam Brooke, co-founder and CEO of Saving Stream told Orca some months ago that their sweet spot is £1million - £5million loans. Saving Stream forecasted that they’d be listing loans in the region of £25million in the not too distant future. Currently the max. loan value in the portfolio stands at just over £6million.
Here is a breakdown of live, repaid and available loans within the current Saving Stream loanbook:
Live Loans
Total live loans: 70 (67 in drawdown, 3 yet to drawdown loan)
Total value live loans: £105,528,063
Total asset security value: £192,545,000
Max. LTV ( per cent): 70 per cent
Repaid Loans
Total repaid loans: 38
Total value repaid loans: £32,425,500
Total value assets of repaid loans: £60,040,000
Pipeline Loans
At Saving Stream, when vetting loan applications there are three stages prior to an application being deemed successful. These are:
Stage 1: Solicitors Instructed
Stage 2: Replies to Enquiries Received
Stage 3: Report on Title Received
Total pipeline loans: 7
Total value pipeline loans: £22,587,124
Total asset security value: £47,350,000
Available loans
As the amount that can be lent to a single available loan varies, investors can find all available loans by clicking below and then clicking on the ‘Investments’ tab:
Saving Stream defaults
Saving Stream announced that one of its live loans has gone into default, this means that the outstanding interest and capital to be repaid to investors will be recovered by seizing the collateral on the loan and selling it.
This is the second time Saving Stream has experienced a default in its three years in operation. The first default was recovered in a three-month period with the property securing the loan selling for the original valuation, thus repayments could be made to investors.
Saving Stream security measures
Asset security
Saving Stream only facilitate loans to asset-backed property borrowers. Saving Stream takes a charge on the borrower’s asset – usually property – this means the asset secures the loan, so in the event of borrower default, where the loan can’t be repaid in full, the asset/property will be seized by Saving Stream and sold to recover the debt.
Saving Stream will only lend at 70 per cent (max.) of the value of the borrower’s property, I,e:
£1,000,000 asset = £700,000 loan max. (70 per cent LTV – Loan To Value)
Provision fund
Many of the major peer-to-peer lending platforms in the UK maintain a provision fund which sees a percentage of borrower repayments stored in this safeguard. It can be used to repay any outstanding debt to investors, but only at the discretion of the peer-to-peer lending platform’s directors.
Saving Stream’s provision fund is maintained at 2 per cent of all live loans, at any time.
(*stats correct at time of publication 06/16)
Current live loanbook is valued at: £105,528,063
Current provision fund is valued at: £2,110,561
Conclusion
For relatively experienced investors looking for exposure to property loans at a high yield in the region 10 per cent + then Saving Stream could be a good option.
A recent default and the increased rate of return bearing elevated risk (you must manually select your own loans) may cause some nerves for inexperienced investors, in which case it is worth reviewing the statistics laid out in this Saving Stream review; the provision fund is maintained at a sufficient level to recover debt, should Saving Stream decide to use it, which should give some comfort. Also, the LTV (loan to value) never exceeds 70 per cent the value of the asset/property securitizing the loan, as can be seen when browsing loan opportunities.
