NPL (Non-Performing Loans)
An NPL, or non-performing loan, is a mortgage-backed loan that the borrower has stopped paying and that banks sell at a steep discount.
Detailed explanation
When a borrower stops meeting their mortgage payments, the lender classifies the loan as non-performing. To remove it from their balance sheet, banks and funds sell these debt portfolios below face value. The investor who buys the NPL acquires the credit right and the associated mortgage collateral, not the property directly.
Practical example
A flat appraised at €200,000 with an unpaid debt of €120,000 can be bought as an NPL for €60,000-80,000. The investor recovers their capital by enforcing the collateral or negotiating with the borrower.
When it matters
Understanding NPLs is key if you are looking for the biggest discounts on the market and are willing to go through a legal process in exchange for a larger margin.
At Arkos Investor
At Arkos Investor we select and audit off-market NPL portfolios so you can access mortgage debt before it reaches the traditional portals.
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