Investors get their money back when a loan they have invested in repays (see below for what happens if a borrower is in default and the loan is not repaid in full).
Early Loan Repayment
All borrowers have the right (through law) to repay their lending at any time. This means that it is possible that the loan that you have invested in, may repay early. If this occurs, you will receive interest up to the day of repayment. You will then have the opportunity to reinvest your funds into another available investment.
Renewal/Extension of Loan
It is also possible that borrowers may not repay their loans on the maturity date. Some borrowers seek an extension of their loan term.
As managers of your loan investment Southern Cross Partners may, in some cases, decide that an extension to the loan may provide the most efficient strategy to obtain loan repayment, and in these cases you will be advised of the revised loan terms, including the new maturity date and your investment continues unchanged. NOTE: It can take up to 30 days past the maturity date to gather the required documentation
If you do not wish to continue with your investment with this new maturity date, we do provide a mechanism that allows you to make your investment available for on-sale on our Secondary Market, free of charge.
If no arrangement or discussion is undertaken about any extension, we will take whatever action is necessary to compel the borrower to repay the loan after the maturity date has passed which may include the issuing of a Property Law Act Notice –
When the loan does repay, the funds are collected on your behalf by our Solicitors, (who normally deal through the borrowers solicitors). These funds are lodged to the Loan Investment Trustees Limited Trust bank account and are then disbursed in terms of your instructions, which will either be:
Pay by Direct Credit to your Bank Account
Retain in the Loan Investment Trustees Limited Trust account pending your reinvestment instructions
Either way, we will notify you, both when we learn of the pending repayment, and also when the repayment actually occurs.
It is possible, due to the borrower’s changed circumstances or a significant decrease in the value of the borrower’s property, that it may be prudent for us to accept a lower repayment amount which could leave a shortfall for investors. Alternatively, we may decide that a mortgagee sale will yield a better result for investors rather than accepting a lesser amount from a borrower. This could also result in a shortfall of funds (which the borrower and any guarantor is still obliged to meet). To learn more about what happens if there is a shortfall when a loan is repaid, click here
Exiting an Investment early
Should you wish to exit all or part of your investment prior to maturity, we do offer a Secondary Market service, which is where existing investments can be offered for resale (on our website) to other investors. In some situations, use of this service may incur an administrative charge of $175.00 and you should familiarise yourself with our Secondary Market rules so that there are no surprises.