Definitions

THIS FUNCTIONALITY IS CURRENTLY ONLY AVAILABLE FOR ISLE OF MAN BASED USERS.

The terminology surrounding loans can be quite difficult to understand, so below is a list of some definitions of the terminology we use throughout our Bitcoin Backed Loan product.

Origination fee - the origination fee is a fixed 2 GBP/USDT fee that is charged by CoinCorner to facilitate the loan. This fee is included in the total loan amount.

Loan-to-value (LTV) - the initial loan-to-value is a percentage calculated at the start of your loan using the loan sum in relation to the value of bitcoin being locked as collateral. It is calculated as follows: (Loan Value / Collateral Value) x 100. If the LTV gets too high then this can trigger a margin or liquidation call to bring it back down to a healthy level:

• 60% - a  warning will be issued informing you that your LTV has increased to 60%
• 70% - a Margin Call will be issued prompting you to take action to bring the LTV to 60%. If after 72 hours your LTV is not at or below 60%, CoinCorner will automatically liquidate sufficient collateral to bring LTV down to that level
• 80% - your loan will be put into Default and CoinCorner will automatically liquidate sufficient collateral to bring LTV back down to 60%

Any costs incurred by the liquidation process shall be the responsibility of the Borrower.  

Margin call - a margin call refers to the situation where the value of the collateral supporting the loan falls, causing the LTV to increase, which triggers a demand from CoinCorner for additional bitcoin to be put up or a loan repayment in order to reduce the LTV back to 60%

Forced liquidation- this is a liquidation call where the LTV increases to 80% and we have to sell a portion of the collateral bitcoin in order to bring the LTV back down to 60%

Default - if a default occurs the remaining Loan Sum becomes fully payable within 7 days after the date on which the default occurred

Collateral - collateral means the value of the bitcoin that is locked as security for a loan. The value is locked and controlled by CoinCorner for the period in which repayments are still outstanding on the loan. Once all repayments are complete, the collateral is unlocked and credited back to your available balance. If the LTV changes during the loan period, additional collateral may be required.

Interest rate - the interest rate is a cost of borrowing the loan sum expressed as a percentage of the amount borrowed. Our loans have an interest rate from 8% to 15%.

Liquidate - this is where collateral is sold in order to reduce the LTV ratio following a margin call or default. Manual liquidations can also be made on loans with a low LTV in order to free up collateral, the value of which may have appreciated during the loan term. This feature is available to customers in their account.

Repay - where a payment is made against the loan sum with fiat currency.

Top-up - where additional bitcoin is added as collateral as security for a loan. 

Annual percentage rate (APR) - this is the yearly rate charged for a loan and includes interest and fees.