A diversified portfolio

Responsible lending to creditworthy borrowers

Your money is only lent to borrowers who are creditworthy when the loan is granted and can demonstrate that they are able to pay back the loan. Borrowers’ creditworthiness may change over time and cannot be guaranteed. Your initial investment and any reinvestments could be matched with new or existing consumer, property, asset or other loans detailed below. 

We put the different types of borrower who borrow through RateSetter into four risk categories:

• Consumer
• Property
• Asset
• Other

All applicants are assessed for creditworthiness and affordability (using, at a minimum, credit reference agency and application form data).  Additional rules are applied, relating to the credit history of the individual, depending on the type of loan they are applying for.  All of this data is combined to produce a score which drives the APR and risk expectations of each individual loan.

Lending criteria required at application:

• UK resident with ID and residency confirmed
• All applicants assessed for creditworthiness and affordability (using, at a minimum, credit reference agency and application form data)
• Applicants must be at least 18 years old at the point of application
• No Bankruptcies, Individual Voluntary arrangements (IVAs), Debt relief orders (DRO) or Trust deeds

We undertake credit reference agency searches on both the business and the directors behind the business. An initial appraisal of the project is undertaken prior to credit assessment including understanding the experience of the developer and an assessment of the proposed project. All potential sites are visited.  Independent third party professional due diligence is then also undertaken on behalf of Ratesetter by suitably qualified and experienced professional firms in the form of a professional valuation, a detailed initial project report from a monitoring surveyor (and ongoing monitoring of the project) and legal due diligence including a Report on Title.

Lending criteria required at application:

• Min 5 years previous development experience of similar schemes
• Max Loan to Cost 80%
• Max Loan to Gross Development Value 65%
• Full Planning permission to be held
• Min 10% contingency on hard construction costs
• Development Exit – Max 70% Loan to Value

We undertake credit reference agency searches on both the business and the directors behind the business.  The business’s financial accounts and the personal guarantors’ asset and liability statements are analysed to demonstrate serviceability and security ratios. Other supporting information is also obtained and assessed as part of the risk assessment. A Risk Rating is applied to each facility which determines the credit rate paid to the provision fund.

Lending criteria required at application:

• New and used business assets
• Two years’ filed accounts and three months’ bank statements
• Credit searches on the business and principles behind the business
• Financial analysis and affordability from cash flow financial statements

Family finance (discontinued in January 2020)

Lending businesses (discontinued in December 2016)

Business unsecured (discontinued in January 2018)

Individuals secured (discontinued in April 2019)

The loan contracts facilitated by RateSetter contain no fees for lenders. Lenders may have to pay a Release Fee depending on the investment product they have chosen.

Borrowers are charged fees to pay RateSetter for its role in originating and servicing the loans and to contribute to the Provision Fund. These fees vary by term, amount and the creditworthiness of the borrower. They are split between being charged at the outset and through the term of the loan.

As of the last 12 months, the average of the split of those fees is set out in the table below: