There are plenty of investment options out in the market place for you to choose from - stocks, bonds, real estate, and of course, peer-to-peer lending to name a few.
Peer-to-peer lending and investing is a relatively new concept in New Zealand so in this article, we'll try to answer our most frequently asked questions.
Let's begin with a brief explanation of P2P lending.
1. What is peer-to-peer investment?
A peer-to-peer marketplace has two sides - people who want to borrow money and the ones who want to lend money. The transaction is mediated by a third party, such as Southern Cross Partners.
Read more: The What, How And Why of Peer-to-Peer Lending
2. What is the minimum investment?
Each loan offered will have a different minimum investment and at present our lowest minimum that could be available is $10,000.00
The minimum investment amount depends on the total loan amount and the number of preferred investors in a loan. For example, a loan of $1 million may require a minimum investment of $100,000, allowing 10 people to invest.
3. How safe is my investment?
All investments are supported by a registered first mortgage over property , this means that we have the ability to take the property to mortgagee sale should the need arise. In addition you select the investment that has the terms that suit you, such as location or the LVR (loan to value ratio) keeping your investment strategy in mind.
However its important to realise that all investments have risks and we have outlined most of these here.
4. Is Southern Cross Partners regulated?
The answer to your question is a resounding yes. We are licensed to provide these peer to peer lending services by the Financial Markets Authority (FMA) the government agency that's responsible for financial regulation in New Zealand.
As a peer-to-peer business, we are required to adhere to the legislation which applies to financial market firms. This includes the Financial Markets Conduct Act.
5. Who manages the loan?
We do. Once you have invested with us, we'll manage the loan on your behalf. You won’t have any contact with the borrower and we are committed to taking the necessary action for recovering payments.
We will collect all interest payments from the borrower, ensuring that these are held in a separate trust account, and, once received, will then pay your interest to you each month.
6. What information will I get about each loan?
You will get the following information:
- Terms and pricing of each loan
- Fees and interest margin that we'll earn
- Borrower's default history (if any)
- Description of the property or properties offered as security
- Any other relevant information that will assist you in making an investment decision
7. What information will I not get?
You will NOT get the following information:
- Borrower's name or address (as this would a breach of the Privacy Act)
- Copy of any property valuation report
8. What happens if I want my money back before maturity?
When you invest via peer-to-peer investing with Southern Cross Partners, your investment is locked with us until the loan repays. If you end up in a situation where you need your investment back before maturity, you could sell your loan to other investors through our Secondary Market service.
9. Can I have my name on the property title?
Investors cannot have their name on the property title. The title of the property lies with our trustee company called Loan Investment Trustees Limited .
10. What happens if Southern Cross Partners fails?
Good question. We have been in business since 1997 and have been successfully assisting Kiwis with their financial needs for well over 20 years. However, we also have a robust contractual agreement with another finance provider to manage all the loans if necessary.
It's understandable that you will need all your questions answered before you invest your hard-earned money.
So, if you still have any questions, feel free to get in touch or check our FAQ page.
