• info@hnwlending.co.uk
  • |
  • 72 Charlotte St, London W1T 4QQ
  • |
  • 0203 488 0184

Risks for Borrowers

Risks for Borrowers


1

Failure to pay interest or loan repayments on time

If a borrower fails to pay interest or a loan repayment on time, then the loan will be placed in 'default' as set out in the loan documentation. This means that a higher rate of interest will apply from the date of the missed payment. Should the payment remain unpaid for a continued period and the borrower is unable to reach an agreement with HNW about repayment, then it is likely that a debt collection agency will be appointed to collect the debt and additional fees will become payable by the borrower to pay for this. Further continued non-payment may result in additional fees as solicitors, LPA receivers and other professionals may be called in to help recover the debt. These fees will also be payable by the borrower. In the most extreme cases, the borrower may be compelled to sell the asset to repay the outstanding loan, interest and fees that have been incurred

2

The loan agreement is breached

There are a number of ways in which the loan agreement can be breached other than non-payment of interest and capital. These are set out in detail in the loan agreement itself, but include, for example, the value of the asset falling below a certain threshold or the borrower being made insolvent or bankrupt. In this case the loan will be placed into default and the same consequences as in (1) above may result

3

The asset does not sell for sufficient to pay the outstanding loan, interest and any charges in full

If the asset does not sell for a sufficient sum to pay the outstanding loan, interest and any charges in full, then the borrower and / or any guarantor will generally become liable to pay the shortfall in the loan. HNW Lending Ltd would usually appoint a debt collection agency to act on its behalf in these cases and work with the borrower and/or guarantor to find a way to settle the outstanding debts. However borrowers and guarantors should be aware that they may compelled to sell other assets to pay the outstanding indebtedness due on a HNW Lending Ltd loan and, in extreme circumstances, they may be subject to insolvency or bankruptcy proceedings