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Interest rates and fees

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Interest rates and fees

A new asset class for investors

Lenders chose the loans which provide their preferred level of risk and return. To assist lenders with their decision making, LendMe assigns each loan a credit score based on the information obtained by LendMe about the borrower and provided by the borrower to LendMe.

The credit score is an alpha numeric grading system and reflects a borrower’s ability to service the proposed loan, their credit history and the loan to security value ratio (LVR).

The alpha part of the grade takes into account the borrower’s ability to service the proposed loan and the borrower’s credit history and ranges from A – F. The best grade is A, while F is the worst.

The numeric part of the grade takes into account the loan to security value ratio (LVR) and ranges from 1-5. This is the amount of the loan compared with the value of the security. For example, if the loan amount is $100,000 and the security is valued at $400,000 then the LVR will be 25%. The most secure band is 1 while the highest is 5.

Alpha Grade (A–F)

  • Lowest Risk. Default is considered remote.
  • Low risk. Default is considered highly unlikely.
  • Moderate risk. Default is considered unlikely.
  • Acceptable risk. Default is not anticipated.
  • Possibility of default. Risk features merit close attention and scrutiny
  • High risk of default in the event of changes in the economic and/or business environment

Numeric grading (1–5)

  • LVR under 20%
  • LVR 20% to 39%
  • LVR 40% to 59%
  • LVR 60% to 79%
  • LVR 80% or greater

Indicative lender returns – net of management fee
(effective 1 October 2015)

The following returns for lenders are indicative only and may change at any time.

  A B C D E F
1 5.74% 6.04% 6.64% 7.49% 8.79% 10.49%
2 5.99% 6.39% 7.09% 7.99% 9.39% 11.24%
3 6.24% 6.74% 7.54% 8.49% 9.99% 11.99%
4 6.29% 6.89% 7.84% 8.79% 10.39% 12.54%
5 6.29% 7.04% 8.09% 9.09% 10.74% 13.09%

Loan management fees (effective 1 October 2015)

Rates are calculated on a per annum basis and deducted monthly from repayments.

  A B C D E F
1 0.90% 1.10% 1.20% 1.25% 1.45% 1.55%
2 0.90% 1.10% 1.20% 1.25% 1.45% 1.55%
3 0.90% 1.10% 1.20% 1.25% 1.45% 1.55%
4 1.10% 1.30% 1.35% 1.45% 1.65% 1.75%
5 1.35% 1.50% 1.55% 1.65% 1.90% 1.95%

Risk

There is risk attached to every financial transaction and generally the greater the risk the higher the return. The major risk in any lender-borrower relationship is loan default, where a borrower cannot or will not pay the money they owe. If a loan default occurs lenders may not receive all of their monthly payments.

LendMe acknowledges the risks of lending and has put in place a number of checks and controls to minimise lenders’ exposure to risk. This includes the rigorous screening of borrowers, including their credit history, to determine ability to service debt. We also proactively manage loans and take immediate action if a borrower fails to meet their repayment obligations. We further reduce risk by securing all loans over assets, typically 1st mortgage over property.