Managing Risk: What Investors Need to Know
The best way to understand UK property-backed investments is to do your research. Read widely, talk to people, ask questions and make clear decisions about which risks you’re happy to take, and which you aren’t.
At Kuflink, every process from underwriting to marketing is built around minimising risk and being transparent. As with all investments, there will always be an element of risk involved, but here are just a few ways we maximise the security of our platform and the opportunities we offer:
Assessing the Borrower
Our bridging finance team spend days, or even weeks, assessing each property loan application that comes to us. We work with national agencies such as Equifax and the Land Registry to check every detail, and our in-house team of property and finance experts use their industry knowledge to bolster our underwriting procedures.
Our checks also cover the client themselves, looking at their financial situation, current liabilities, credit history and companies they are, or have previously been, a Director of. Once we’ve confirmed all the details of a loan, it is then passed to our two independent credit committees for final sign off.
Safe as Houses
Every penny we lend is secured against UK property and we use independent valuers to ascertain two valuations for each property. The ‘open market value’ is the price we could expect the property to sell for under normal conditions, and the ’90-day value’ gives an indication of what price we could expect the property to achieve should we need to sell at auction.
We will only ever lend a maximum of 75% of the security property’s value, or to use the industry term; we lend at a maximum 75% loan to value. This means that if a property is worth £100,000, we would not lend more than £75,000 against it. We keep this buffer in place to absorb any potential dips in value, property market fluctuations or repossession fees (hopefully not needed!).
Inside and Out
Risk management at Kuflink doesn’t just happen internally. As a regulated firm, we have to meet stringent criteria set out by the Financial Conduct Authority.
One of the FCA’s three main objectives is to protect consumers, whether that be through monitoring how we market our products or making sure our staff are up to date on regulatory matters. We are continually in conversation with them to make sure our operations meet the highest standards possible.
It’s hugely important to us that our opportunities are transparent, and that we’ve taken reasonable steps to ensure investors understand what they’re funding.
As of 2018, we’ve also held an ISO27001 certificate, which is an internationally recognised information security certification. In practice, good information management encompasses everything from ensuring employees lock their screens when away from the desk to using hacker-proof software and helping prevent cybercrime.
We’re always happy to help our investors understand more about risk, and it’s far too large a topic to cover in one blog post. If this article has got you thinking, please feel free to get in touch with any questions you may have. Please bear in mind, though, we’re unable to provide any financial advice or recommendations. You can reach our Investor Relations team on email@example.com