Investor FAQs

Investment Security

How are my funds secured?

Finbase believes in providing secure investments to our clients. We always ensure that the loan amount does not exceed 60% of the property value and it is secured with a first ranking mortgage registered on the title.

What is the maximum Loan-to-value Ratio you lend up to?

The maximum LVR we lend up to is 60% of the property value. This helps to ensure that investor capital is secure in times of any market downturn or other unforeseen circumstances.

What happens if the borrower defaults on their repayment?

In the event that a borrower defaults on their repayment, Finbase takes immediate steps to recover funds. This includes initiating proceedings, and if required, Finbase will manage the mortgagee sale process of the asset which the loan is secured against to recover the principal amount owing plus any interest due. Please note that we cannot guarantee any returns or predict whether or not there will be any financial losses.

What is the risk of loss of any part of my funds?

Although Finbase has never suffered any loss of investor capital or interest, it is important to understand that there is risk involved with investing. These risks could involve the borrower defaulting on a payment, or being unable to exit the asset to recover the full amount of capital.

Finbase takes steps to ensure that all funds invested are secure. We do not lend more than 60% of the property value. However, as with any form of investments, there is always an element of risk involved so it is important to understand these risks.

Besides first ranking mortgage on the property, do we take any additional security over the Borrower?

Yes, we take additional security over the borrower in the form of a personal guarantee. This provides us with an added layer of protection and covers any shortfall should the value of the property not cover the loan amount.

Investment Eligibility and Requirements

What is the minimum investment requirement?

Finbase caters to wholesale investors and the minimum investment requirement is $100,000. This amount can be invested across multiple loans or in a single loan.

What is a wholesale investor?

A wholesale investor is a person or company that has an understanding of the financial markets, has invested in similar investments before, and meets the legal criteria of what is considered a wholesale investor: Read more here.

The purpose of requiring investors to be classified as wholesale investors is to ensure that they are investing with sufficient knowledge and experience to understand the risks associated with this type of investment.

Can I re-invest my interest distributions back into the fund?

Distributions will be deposited into your designated bank account. If appropriate, you have the option to reinvest these funds into future investments.

What happens if I want to exit my investment before the loan maturity date?

Finbase investments are generally illiquid fixed term investments.

If you wish to exit your investment before the loan maturity date, Finbase will work with you to manage the process. We can arrange to facilitate an early exit from the loan by substituting it in part or as a whole to another wholesale investor.

However, it is important to note that there may be costs associated with this and that it may not always be possible to organise another investor to replace your position in the investment.

I don’t like non-metropolitan areas, do I have to have my funds tied to those locations of NZ?

No, you are not obligated to invest in non-metropolitan areas. Finbase’s loan book is well diversified across all types of property located throughout New Zealand, so you can choose the areas that best suit your investment strategy and risk appetite.

Investment Returns and Terms

What is the term of investment?

The term of investment depends on the loan being offered. Loans are short-term with the maximum term available up to 1 year. Every loan is different and the terms are always made clear to investors before they make any commitments.

What happens if the Borrower repays early?

If the borrower repays early, Finbase will return all of the investor’s funds plus any accrued interest. The full amount is paid back to the investor as soon as we receive it from the borrower. You will then be able to redeploy funds into another investment if you choose to do so.

Does the borrower pay principal repayments each month?

No, the borrower pays interest only. The loan principal amount is paid back in full at the end of the loan term.

What kind of Credit Analysis is undertaken against each Borrower?

We take great care to ensure that the borrowers we approve meet our strict criteria. This includes a detailed credit analysis of the borrower’s financial history and asset position as well as an assessment of their exit plan/repayment capacity. We also conduct background checks on past borrowing history and any relevant court judgements or liens associated with the borrower.

Is the loan term ever extended by the Borrower?

The loan term is fixed and cannot be extended by right. However, the borrower may request an extension. Finbase will first offer the opportunity to you continue investing in the loan. If you require your funds back, Finbase will offer the investment to other wholesale investors.

What happens when interest rates rise?

When investing in any asset class, it's crucial to consider interest rates. At Finbase, we carefully evaluate the possibility of rate increases and tailor our loan terms accordingly. By keeping them short, we ensure that if interest rates do rise, you'll have the opportunity to participate in higher-yielding investments. It's worth noting that the opposite holds true in a declining interest rate environment.

Investment Process and Control

Do I have control over which property(ies) my funds are lent against?

Yes. Finbase gives clients the power to choose which property(ies) their funds are lent against. We will provide full disclosure of information relating to each prospective investment and then you can make an informed decision on whether it is suitable for your portfolio or not.

How does Finbase make money?

Finbase makes money by charging a loan origination fee to the borrower. The fees are typically between 1-2% of the loan amount, depending on the type of loan structure. This covers all legal costs associated with setting up the loan agreement and managing the borrower / loan throughout the loan cycle.

Are there any costs or fees involved?

Finbase does not charge investors any fees to use our services.

Finbase charges an origination fee and ongoing service fees to the borrower. Additionally, borrowers are also required to pay a one-off establishment fee that covers all legal costs associated with setting up the loan agreement. We will fully disclose our fees before any transaction is made so there are no hidden surprises.

What exactly am I investing in? Is it real estate or the loan?

You are investing in a loan secured against real estate. The loan is an asset-backed investment, which means that the invested funds are secured with a first ranking mortgage over the property used as security.

Investors receive interest payments on their capital at regular intervals or as agreed upon by Finbase and the investor prior to making the investment.

What type of borrowers are these funds being lent to?

Finbase lends funds to companies, trusts and individuals with experience in dealing with real estate. We also lend funds to developers for the purpose of bridging or refurbishing existing properties.

We carefully assess each borrower’s asset and loan requirements before any loan is approved, and we only offer loans that we deem suitable for our investors.

Where are the loans being sourced from?

The loans are sourced from a variety of places including mortgage brokers, financial advisors in addition to our own investor and developer networks.

Why are these borrowers not going to the main banking institutions?

The borrowers may be seeking finance outside of the main banking institutions for a variety of reasons. Their loan requirements are likely too complex to be funded by traditional lenders. Finbase is well positioned to meet these types of borrower needs as we work to understand the borrowers project and exit strategy.

What sort of property are the funds lent against?

The loans are generally secured against residential and commercial property assets located throughout New Zealand. We do not consider leasehold security.

Company Information and Regulation

Is Finbase a Registered Financial Service Provider?

Yes, Finbase is a Registered Financial Service Provider (FSP). We are registered with the Financial Markets Authority and work to comply with all applicable laws.

Is Finbase overseen by any Regulatory body?

Yes, Finbase is overseen by the Financial Markets Authority. As a registered FSP we are required to comply with all applicable laws and regulations.

Additional Information

How do I know fair market value of the property the funds are being lent towards?

Finbase always carries out an evaluation of the asset that is used for security. In some cases, an independent property valuation is commissioned by a qualified valuer to ensure that the loan amount does not exceed 60% of the property value. This helps to protect investor capital from any adverse market conditions and unforeseen events.

Additionally, we provide investors with full disclosure of all information relating to each prospective investment so they can make informed decisions as to whether it is suitable.

What is RWT and how is it calculated?

RWT stands for “Residential Withholding Tax”. This is a tax that is applicable to all interest income from residential mortgages in New Zealand. The amount of RWT you are liable for depends on your taxable income bracket and the total amount of distributions being received. We require your RWT tax bracket, and deduct RWT from your distributions before they are deposited into your bank account.

What is the current LVR across Finbase entire loan book?

Finbase’s current LVR across its entire loan book is 38% as at August 2023. This ensures that all of the investments are well diversified and secured against real estate assets. It also provides investors with additional security knowing that their funds will not be exposed to undue risk.

Are the Finbase directors/shareholders personally invested in the fund?

Yes, the Finbase directors and shareholders are personally invested in the fund. This is to ensure that we have full alignment with our investors and a vested interest in the long term success of the company.

What is Finbase's track record loss of investor capital?

Finbase has a strong track record of preserving investor capital and have not experienced any loss in investor capital to date. We have strict risk management policies and procedures in place.

What is a first mortgage?

A first mortgage is a loan secured against the borrower's primary asset, such as a house or commercial property. The lender is given priority over any other creditors. In the event of default, the lender has the right to repossess and sell the property in order to recoup their losses.