Graf Mortgage launches secured finance fund

The group has launched the UK Secured Finance Fund Oeic to make short-term bridge loans available to professional property investors, secured against commercial and residential properties.

The fund will share risk with high street banks on the short-term loans.

It will aim to lend to high net worth property investors, with financing provided subject to full financial underwriting.

Bridging financing is often used by property developers, who use it to buy a new property and begin developing while they are still waiting to receive a cash sum from the sale of a previous property.

The fund's loans are expected to range from £50,000 to £500,000 and will not exceed a year in term.

There will be a minimum 30 per cent loan-to-value margin to ensure extra capital security.

Steven Green, managing director of Graf, said the product offered a high level of investment security.

He said: "The fund's financial model is built on a highly robust basis with a number of contingencies incorporated.

"That means many areas would need to fall well short of current expectation for the projected level of return not to be achieved."

The fund requires a minimum £20,000 investment and carries an annual management charge of 1 per cent a year.

It is expected to run for a minimum five years, and a penalty of as much as 7 per cent will be levied if investors redeem their capital early.

The administrator and registrar for the fund is Blue Sea International, with PriceWaterhouseCoopers, Isle of Man acting as auditor and tax adviser.