Private credit, in plain English.
Working definitions of the terms that appear on a private credit loan file. Written for the broker, borrower or investor who'd rather not Google mid-conversation.
8 terms today, expanding as the team writes them. Cross-references between entries link the related terms so a question about LVR doesn't leave you wondering what an exit strategy is.
LVR (Loan-to-Value Ratio)
The size of the loan as a percentage of the property's value. The lower the LVR, the more conservative the lender's exposure.
Bridging finance
Short-term lending used to bridge the gap between two events — typically a settlement and a sale.
First mortgage
A loan secured by the senior charge over a property. The first mortgage holder is paid out first if the property is sold or repossessed.
Second mortgage
A loan secured by the second-ranking charge over a property, sitting behind a senior first-mortgage lender.
Caveat loan
A short-term loan secured by lodging a caveat over a property, used where speed matters more than tenor.
Wholesale investor
An investor qualified under section 708 of the Corporations Act 2001 (Cth) who can be offered securities outside the retail disclosure regime.
FUM (Funds Under Management)
The total dollar value of capital a firm manages on behalf of investors, across all its funds and mandates.