ContactLast updated 10 August 2026
Understanding the risks
Property-backed lending places your capital at risk. You could lose some or all of the money lent, repayment may be delayed and returns are not guaranteed. This page is general information only; every property, borrower, security package and legal agreement must be assessed separately.
Property and valuation risk
- The purchase price or valuation may not reflect the price achieved on a sale or enforcement.
- Property values, rents and buyer demand may fall.
- Comparables and completed-value assumptions may prove inaccurate.
Development and timing risk
- Planning, licensing, building-control or contractor issues may delay a project.
- Refurbishment, finance, tax, professional and holding costs may exceed the budget.
- Defects, title issues, utilities, fire-safety requirements or unforeseen works may arise.
Exit, repayment and liquidity risk
- A planned sale or refinance may not be available at the expected time, value or loan-to-value ratio.
- Interest and capital are normally repaid on redemption rather than monthly.
- The loan is generally illiquid. You should not assume you can withdraw or transfer it early.
- An extension, default or enforcement may delay repayment and create additional costs.
Security risk
- A first legal charge gives documented security and ranking but does not guarantee full recovery.
- Enforcement proceeds may be reduced by property value, prior-ranking costs, taxes, professional fees, delays or other documented claims.
- A personal guarantee is only as valuable as the guarantor’s assets and ability to pay when enforcement occurs.
Borrower and concentration risk
- The borrower or another important party may become insolvent or fail to perform.
- Key-person, contractor, insurer or professional-adviser failure may affect delivery.
- Concentrating a large proportion of available capital in one borrower, property or asset class increases exposure to a single adverse event.
Regulation, protection and tax
Do not assume that a loan is regulated, that an exemption applies, or that Financial Services Compensation Scheme or Financial Ombudsman Service protection is available. The position depends on the legal structure, communication, parties and documents. Returns are shown gross and tax treatment depends on your circumstances.
Before committing capital
Review the property, borrower, permitted use of funds, valuation basis, costs, contingency, primary and fallback exits, proposed charge and ranking, guarantees, reporting, default and extension terms. Obtain independent legal, tax and financial advice and invest only where you understand the risks and can bear a loss.