Understanding the terminology we use at SCP

As a peer-to-peer lender, Southern Cross Partners helps Kiwis achieve financial freedom through both secured investments and specialist loans.

We know there is lots of jargon in the lending space, so we thought it would be helpful to provide you a list of definitions for some of the terms you’ll see regularly if you have SCP investments.

Below are the common terms used in our industry and at SCP specifically. We hope these help you, whether you’re starting out investing in property finance or an experienced investor looking to have a quick recap.

On-call account – Southern Cross Partners places funds received, either from a bank deposit or a loan repayment, into a trust account. This amount will show in your On-call account which you can view on the portal.

Internal credit score – This is a scoring system that Southern Cross Partners uses internally, which allows our credit team to better understand the level of risk involved with each loan application we receive. This ranges from a score between 1 (lowest risk) and 5 (highest risk) and is no indication of the borrower’s individual credit rating.

Anticipated maturity date – This is the date that the borrower will likely repay their loan in full. This date is indicative only, as a borrower may wish to make earlier repayments or request to extend the term. Funds are not automatically paid on this date.

Loan renewal – Sometimes the maturity date of the loan needs to be extended. This is called a loan renewal. All loans and investments associated with these loans remain valid, accumulating interest until the loan is repaid in full.

Loan to Value Ratio (LVR) – The measurement of the size of the borrower's loan, relative to the value of their property as a percentage. The lower the percentage figure the more equity a borrower has in the property.

Loan interest – The costs involved with borrowing the money, or the price of lending money. In a ‘fully serviced’ loan arrangement, the borrower is responsible for paying the monthly interest (cost of borrowing) over the life of the loan. For a capitalised interest loan, the loan payments, calculated for the life of the loan, are added to the total loan amount to be repaid in full at the end of the loan term and no monthly payments are made.

Investment status – An indication of whether the loan is available for you to invest in or not:

• Opportunity: This loan may still be an active opportunity on the investments opportunity page and investors may invest further funds if they wish. If we are still awaiting funds from other investors to fulfil their pending orders the sum available will show as $0
• Sale (pending): You have sent a request to on-sell an investment via the secondary market, and your request is being processed by the investment admin.
• For Sale: Your request to sell this investment has been approved and it is available for sale on the portal.

You can see the investment status of all of SCP’s current loans on the portal.

Partial repayments – A lump sum payment on a loan that is still within the loan term. This can happen for a number of reasons, for example – the borrower has sold one or more of the security properties, they have obtained funds from other sources, or a reduction in the loan amount is required to approve a renewal.

Loan terminology can be tricky to understand for even the seasoned investor. For further information, visit our FAQ page, or reach out to our friendly team who are happy to help with any queries you have - investments@scpartners.co.nz.