As an investor you will receive an agreed interest rate, paid monthly. There are no costs or fees deducted from this, neither are there any setup costs when you begin investing with us. The only exception is a small administration fee of $175 if you elect to make use of our Secondary Market service.
Receiving interest payments
As an investor you’ll receive monthly payments at the pre-determined interest rate. This offering already has a small margin retained by us and we disclose this to you with the offering. The full amount of the offered interest rate is yours with no further deductions, other than tax.
Interest payments are paid by Direct Credit to your Bank Account.
There are various loan interest payment options available to our borrowers (depending on their situations), and these are also mirrored on the investment offerings. These are:
Interest only payments (these are most common)
Borrowers pay their loan interest on a regular basis (weekly / fortnightly / monthly).
We pay interest to investors monthly, to the extent received, on the monthly anniversary date of the loan advance. For example, if the loan was provided to the borrower on the 8th of the month, their payment is due the 8th of the following month and each month after that. Their payment is processed and into the investor’s bank account the next business day.
Borrowers do not make any interest payments during the term of the loan. All interest is collected when the loan is repaid. In the interim, interest capitalises (adds) to the loan each month. (Note in this instance the total loan amount and LVR are disclosed and calculated based on the end value of the loan, i.e., with all interest added to it).
In this situation we do the same with your investment, so your interest will capitalise to your investment each month and be paid when the loan repays. This provide a higher investor return as you receive interest on your interest, but it is not paid until the end.
All income in New Zealand is subject to tax, with tax rate determined by everyone’s specific circumstances. We will act on your instructions (in respect to your tax rate) to the extent the law allows. We will deduct withholding tax from your interest payments and pay this tax to Inland Revenue each month.
You will be provided a Tax Certificate each year (as of 31st March), which will summarise the total interest you’ve been paid, and the tax deducted.
In some circumstances, you can obtain an Exemption Certificate from Inland Revenue. If this is the case and you provide us with a copy, we will not deduct any tax.
All borrowers incur default interest payments which if they don’t meet their payment obligations. This does not automatically pass to investors and is only triggered if your investment defaults.
Southern Cross Partners may meet your monthly interest payments if the borrower does not pay. In this instance your investment is not in default, so no default interest payments will be made to you.
However, if the borrower does not pay and Southern Cross Partners elects not to meet your monthly interest payments, your investment is then in default, and you will be entitled to some default interest payments.
Default interest rules differ between Regulated Term Loan and Non-Regulated Term Loan. To fully understand these, please refer to the sample loan agreements, which are available by clicking here and here.
Those entitled to default interest will be at 50% of the actual default interest we collect, for the period your investment is in default. We will pay this to you once we’ve collected it.
Please note in some circumstances we’re obliged to ‘negotiate’ default charges to reach a solution. Any compromised discounting of default by Southern Cross Partners will be done at our sole discretion and may result in you receiving a lesser amount.