Who can invest?
Currently this investment opportunity is only available to wholesale investors as defined in Clause 3(2) of Schedule 1 of the Financial Markets Conduct Act 2013. The definition of a wholesale investor includes:
- investment businesses (which is itself defined – and includes, for example, entities whose principal purpose is investment)
- a person who meets the investment activity criteria (owns a portfolio of certain financial products to the value of at least $1 million or who carried out transaction(s) in financial products to the value of at least $1 million over the last two years)
- a person that is “large” (net assets in excess of $5 million or turnover in excess of $5 million in the past two financial periods)
- government agencies
Alternatively, you may qualify as an Eligible Investor which is a type of wholesale investor. Eligible investors are people who have enough experience or knowledge about financial products to assess the risks and merits of this offer.
The meaning of each type of investor is set out in the Financial Markets Conduct Act 2013. If you are unsure of your investor category, you should consult with your professional financial adviser, lawyer, or contact us for further information.
There are other ways to qualify as a wholesale investor which may apply to you.
What is peer-to-peer lending?
Peer-to-peer lending matches people who require loans with people who are potentially willing to fund those loans.
The ‘matching’ is done via an intermediary – in this case Rocket Finance, a peer-to-peer lending service.
People seeking peer to peer lending usually do not meet standard bank criteria and are therefore willing to pay a higher interest rate for the money they borrow. Consequently this means the peer-to-peer lending service is able to offer the investors who fund the loans, higher returns than they would typically receive from a bank.
What are the returns?
All loans offer an investment return from 6.50% p.a. before tax. Interest is paid monthly in arrears on the date the loan draws down at the rate specified in the loan agreement. Interest payments will be made according to the loan agreement. Returns are not guaranteed and there is a risk you may not receive the expected return.
What are borrowers needing funding for?
Rocket Finance is an in-house funding partner for Ashcroft Homes and the lending reflects this. All development loans are for small scale residential developments (1 to 10 dwellings) being built in Auckland. Lending parameters for these loans mean LVRs will not exceed 65% and the investors will hold a registered first mortgage over the security property. This will be held on the investor’s behalf in trust by Rocket Nominees Limited. In addition, the builder will always be Ashcroft Homes who will manage the entire project from obtaining consents to subdivision and build works.
From time to time Rocket Finance will have the opportunity to provide investors with funding opportunities secured by existing residential dwellings on Auckland based properties which have no development component.
What is the minimum investment?
The minimum investment starts at $50,000. There is no maximum investment amount and one investor may choose to fund one or more loans entirely.
What is the investment term?
The average investment term will be 6 to 12 months but will vary depending on the loans available.
For development loans the average 12-month term reflects the typical build timeframe, time for code of compliance to be issued and exit to be achieved. Investors will have the opportunity to invest at the beginning of a project or at the halfway point if this is more convenient.
The investor commits to the term of the loan, with development loans this enables the project to progress without delay and reach completion. In rare cases where an investor needs to take their money out prior to expiry, Rocket Finance will offer their loan to a new investor and should this be picked up the original investor can withdraw their funds. There is no assurance that new investors will be available to take over a loan
How is my investment secured?
All loans will be secured by 1st registered mortgage over residential zoned property located in Auckland. Additional securities will be detailed within the individual loan information available for the investor to review, this may include personal guarantees, GSAs, collateral security properties and/or assets and assignments over contracts.
In the unlikely event Rocket Finance should fail, the underlining security that supports your investment remains unaffected as it is held in trust by Rocket Nominees Limited. These assets do not form part of the business of Rocket Finance, so any failure here does not affect your security or entitlement to interest accrual/payments.
What fees are payable?
The investor receives a set interest rate return (from 6.50% p.a. before tax). The borrower pays a slightly higher rate, both rates are disclosed in the loan information summary available when searching for investments. The difference between the two rates is the margin Rocket Finance takes for managing the facility.
The income Rocket Finance receives is paid by the borrower not the investor. The exception being if you wish Rocket Finance to re-offer your investment to a new investor prior to maturity. In this instance, a fee is charged to the investor for the transfer of the loan.
What are my tax implications?
Rocket Finance Limited is required to deduct resident withholding tax (RWT) at the rate the investor selects upon registration. An investor may be exempt from paying RWT and in this case a tax exemption form should be supplied to Rocket Finance upon registration as an investor.