Hey All, Do All Property Investors Actually Understand Loans? The other week, I heard back again from a business owner I had spoken to previously. They had decided to go it alone without a broker and approach lenders directly, rather than work with me as the sticking point was my engagement fee which was required to cover my time and expenses (what they wanted was niche and it would have taken time to research the right lenders and structure the application so that it can passes underwriting). For context, they were looking for a £4m term loan to buy a property, over 12-18 months and had over £15m of other hard assets. Low and behold, they called me to say that they were over the moon and feeling rather smug as they had directly found a private lender (so not a institution or bank) who was able to offer them a loan: - With 2.2% rate of ‘interest’ - Lender arrangement fee of 2% - Further Lender exit fee of 1% - They did not consider leveraging there £15m liquid assets (which I would have proposed if it was beneficial to them at the right cost!) 👉 They had in fact incorrectly assumed it was per 2.2% per year when it was actually 2.2% per month , so an eye watering 27% per year and with over £120,000 in lender fees alone! Their family accountant had recommended this "lender" so they had not considered all available options. I get that lenders use an array of terms like Interest Rate, APR, Factor Rate, Flat Rate, Discount Rate, Headline Rate etc so its no surprise that when inexperienced borrowers decide to go solo, they get lost in lender jargon. Always read the small print and if you are still not sure, ask and ask (and if required, take Independent Legal Advice!) P.S. If you need any advice and a fresh pair of eyes, please feel free to reach out to me at sanjay@finances.house or book in a meeting at calendly.com/financeshouse

Posted by Sanjay Majithia at 2025-09-29 12:45:10 UTC