It is important for us to be clear about the charges that are paid over the Ablrate platform and of the impact that those fees and charges may have on the amount recovered by investors from borrowers in default. When crafting our policy we have a regulatory obligation requiring us to pay due regard to the interests of our customers and treat them fairly. We also have to pay due regard to the information needs of our clients, and communicate information to them in a way which is clear, fair and not misleading
These are the charges that can be made over the Ablrate platform to Lenders and Borrowers:
Lenders Fees
Account Fees – There are no fees associated with opening or maintaining an account with Ablrate.
Loan Exchange Fees – There is a fee of 0.25% of the value of the trade for a seller and a buyer. At this time Ablrate absorbs that fee, so there is currently no charge for buying and selling on the Ablrate Loan Exchange.
Loan Fees – all loan monitoring fees are paid by the borrower.
Borrowers Fees
Admin Fee – this is administration fee that is taken when a loan draws down. This fee is for the administrative work involved in making a loan live, the due diligence and other functions of the platform while preparing a loan.
Loan Monitoring Fee – this fee is the difference between what is charged to a borrower and what interest a lender receives. Typically our charge for monitoring a loan is 2%-4% per annum, paid on a monthly basis (we take this from the monthly payment and pass the net interest on to lenders through the platform). So if a lender is getting 12% on a loan we are typically charging between 14% and 16% to the borrower.
Both of these fees are viewable in the borrowing proposal published for each loan. After the information and risks sections we attached the terms of the loan. If you navigate to the first page of the ‘Loan Terms’ you will see the fees that are being charged on that loan:
3% Admin fee on Draw Down – 4% per annum paid monthly
Instant Returns – Borrowers can chose to ‘enable Instant Returns’. This means that lenders receive a return from the moment they make a bid. The borrower pays this amount from the amount to be drawn down.
Exit Fees – some loans may carry a fee that is payable on exit. This is typically charge when reduced fees are negotiated by the borrower throughout the loan. Development loans typically carry this fee.
What happens in a default? What is the process of monies paid from recoveries?
In a recovery scenario our lenders’ capital and interest comes above the platform fees. If there is a full recovery of capital and interest then Ablrate will receive the fees due to us under the agreement. If there is a partial recovery then the platform does not receive any fees.
Ablrate pays the legal fees associated with recovering a loan. We reserve the right to recover a reasonable amount of these legal fees from the recovered funds however the proportion of legal fees recovered will depend on the amount of loss. If the loss on a loan is more than 25% (capital and accrued interest) then we do not recover any legal fee from the recovery proceeds. The fees associated with insolvency practioners being involved in recovery are out of the control of Ablrate and the insolvency practioners would expect to pass on the recovered fund net of their expense. We do work with an insolvency practioners (Griffin) and work to estimate fees for the work that they do, so that we can look at whether the use of such a company is offset by the amount of the recovery.
If you have any questions about our fees or the borrowers fees and how this affects the loan, please do get in touch.