If one or more of the loans in the pool were to go into default, only the funds and interest in the performing loans will be returned at the investment end date.
Repayments on defaulted loans
The portion of funds and interest invested in defaulted loans will become payable after either an agreement is made with the borrower and the loan goes back into performing or after a realisation. In either case, the proceeds will be reduced by all costs, and the remainder will be split in proportion to the investment amount/interest.
Under adverse circumstances: Investor's invested funds held in a defaulted loan cannot be released until funds have been realised. The actual realisation of the loan part depends on the amount of funds recovered. As an example for a total investment of £100 say £10 is held in a loan that has recently entered default prior to the investment end date, £90 from the £100 will be returned back along with the interest earned on the £90. For the £10 held in an adverse loan, if any funds are realised from the recovered loan, Kuflink will try to pay capital (partial or full) and interest due if available after all costs have been deducted.
To date, our investors have not had any losses as a result of defaults.* (19th February 2021)
Reallocation of funds
- With regards to Auto-Invest and IF-ISA, we take steps to achieve diversification.
- Kuflink will manage your portfolio which may include re-allocating your funds and therefore diversifying your portfolio as we see fit in order to give you exposure to a range of Borrowers and Loan Parts as new opportunities arise.
- There will be specific trigger events, such as new loans entering the pool and repayment of loans, which will trigger a reallocation of your funds across the loans. However, if you have funds in a defaulted loan or loans, these funds will stay within the loan(s) on a triggered reallocation event, until the borrower agrees to new terms or funds are repaid.
*Capital is at risk and Kuflink is not protected by the FSCS. Past returns should not be used as a guide to future performance. Securing investments against UK property does not guarantee that your investments will be repaid and returns may be delayed. Tax rules apply to IF ISAs and SIPPs and may be subject to change. Kuflink does not offer any financial or tax advice in relation to the investment opportunities that it promotes