sd2
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Post by sd2 on Feb 5, 2019 13:27:41 GMT
Just started on ratesetter. Have £1600 in the 1 year account, if I set it at income and capital to holding account, do I pay fees for the removal of capital from the market? If I set it at capital and income reinvested can I take it out after 1 year even though the reinvested money has not been in for 1 year? The same questions apply to the 5 year market. Want to remove money as I get capital and income repaid. I need some income to get me through to retirement.
Excuse my ignorance ratesetter doesn't seem to understand my questions.
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macq
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Post by macq on Feb 5, 2019 13:39:12 GMT
in theory your loans should repay at the end of term fee free but in practice many loans repay early(or part of) also fee free you could set that to repay to your holding account along with the monthly repayments to do with what you want .But any money you reinvest would then start a new term in loans so there is a fee for selling early on that or any other investment on the market(except rolling) Also assume you signed with a bonus after a year so would need to stay over a £1000 for the first year to get that paid
P.s you will not get any repayments in 1 year unless they repay early
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rscal
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Post by rscal on Feb 5, 2019 14:55:46 GMT
.. Also assume you signed with a bonus after a year so would need to stay over a £1000 for the first year to get that paid P.s you will not get any repayments in 1 year unless they repay early To meet this condition any early repayment from the 1 year could be sent to 'rolling' I suppose, which would allow the subsequent invetment to be ender by the lender at the anniversary point with no fee. RM is 'fire and forget' in that sense.
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macq
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Post by macq on Feb 5, 2019 15:19:24 GMT
.. Also assume you signed with a bonus after a year so would need to stay over a £1000 for the first year to get that paid P.s you will not get any repayments in 1 year unless they repay early To meet this condition any early repayment from the 1 year could be sent to 'rolling' I suppose, which would allow the subsequent invetment to be ender by the lender at the anniversary point with no fee. RM is 'fire and forget' in that sense. you mean the new "improved" RM - which actually could work for the OP for fire & forget and the income so you could be right
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macq
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Post by macq on Feb 5, 2019 15:24:08 GMT
Just started on ratesetter. Have £1600 in the 1 year account, if I set it at income and capital to holding account, do I pay fees for the removal of capital from the market? If I set it at capital and income reinvested can I take it out after 1 year even though the reinvested money has not been in for 1 year? The same questions apply to the 5 year market. Want to remove money as I get capital and income repaid. I need some income to get me through to retirement. Excuse my ignorance ratesetter doesn't seem to understand my questions. Thinking more on it - not sure One year is the best choice for income maybe 5 year or rolling would be better but sure a RS expert will help more
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Post by Badly Drawn Stickman on Feb 5, 2019 15:38:01 GMT
Just started on ratesetter. Have £1600 in the 1 year account, if I set it at income and capital to holding account, do I pay fees for the removal of capital from the market? If I set it at capital and income reinvested can I take it out after 1 year even though the reinvested money has not been in for 1 year? The same questions apply to the 5 year market. Want to remove money as I get capital and income repaid. I need some income to get me through to retirement. Excuse my ignorance ratesetter doesn't seem to understand my questions. Thinking more on it - not sure One year is the best choice for income maybe 5 year or rolling would be better but sure a RS expert will help more Not an expert, but depending on circumstances the 5 year would be my choice for income, gives a steady level. Might need a bit of planning if you only wanted the interest as income.
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gareot
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Post by gareot on Feb 5, 2019 18:10:18 GMT
Thinking more on it - not sure One year is the best choice for income maybe 5 year or rolling would be better but sure a RS expert will help more Not an expert, but depending on circumstances the 5 year would be my choice for income, gives a steady level. Might need a bit of planning if you only wanted the interest as income. I'm no expert either but I can give you an example of a five year loan of £ 11.02 started on 15/5/15 which remained after I sold out during the free RS offer a while back. The rate for the loan is 6.4% for 5 years giving me a total return of £ 1.75 when the loan finishes.Unless your capital & interest is reinvested then the rate of interest received is far less than the headline rate. Too date I have received £ 1.66 interest. For the next 9 months I will receive £ 0.01 p.m & for the last 5 months no interest only capital. If you average it out, without further investing in any market, then my interest rate is marginally over 3% per annum for the 5 yr period unless my way of calculating is wrong ( which come to think of it is probably the case ).
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sd2
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Post by sd2 on Feb 5, 2019 18:32:34 GMT
Thinking more on it - not sure One year is the best choice for income maybe 5 year or rolling would be better but sure a RS expert will help more Not an expert, but depending on circumstances the 5 year would be my choice for income, gives a steady level. Might need a bit of planning if you only wanted the interest as income. I have £4000 in 5 year market at 6.2% some of that is bound to be there at the 1 year mark. I might change the 1 year income/capital to the rolling market. Thanks all
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sd2
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Post by sd2 on Feb 5, 2019 18:37:30 GMT
PS I put £1000 in the one year market at 3.7% (silly me) but that works out at 13.7% the rest is in at 5-5.1.
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corto
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Post by corto on Feb 5, 2019 21:02:58 GMT
Not an expert, but depending on circumstances the 5 year would be my choice for income, gives a steady level. Might need a bit of planning if you only wanted the interest as income. I'm no expert either but I can give you an example of a five year loan of £ 11.02 started on 15/5/15 which remained after I sold out during the free RS offer a while back. The rate for the loan is 6.4% for 5 years giving me a total return of £ 1.75 when the loan finishes.Unless your capital & interest is reinvested then the rate of interest received is far less than the headline rate. Too date I have received £ 1.66 interest. For the next 9 months I will receive £ 0.01 p.m & for the last 5 months no interest only capital. If you average it out, without further investing in any market, then my interest rate is marginally over 3% per annum for the 5 yr period unless my way of calculating is wrong ( which come to think of it is probably the case ). Loans on the 5y market amortise. You get interest and a fraction of the capital back in regular intervals (you can find the repayment plans if you search for them in the loan details). Because that continuously repaid fraction reduces the capital you get interest on over time, you don't get 6.x% on of the full initial amount. Think of a rectangle - capital over time. For a non-amortising loan you get interest on the same capital all the time, 6.x%; for an amortising loan cut the rectangle along the diagonal for linear drawdown. That leaves you with half of it. So, you get about 3%; half of of what one may naively expect at a rate of 6.x.
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sd2
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Post by sd2 on Feb 5, 2019 22:19:47 GMT
Loans on the 5y market amortise. You get interest and a fraction of the capital back in regular intervals (you can find the repayment plans if you search for them in the loan details). Because that continuously repaid fraction reduces the capital you get interest on over time, you don't get 6.x% on of the full initial amount. Think of a rectangle - capital over time. For a non-amortising loan you get interest on the same capital all the time, 6.x%; for an amortising loan cut the rectangle along the diagonal for linear drawdown. That leaves you with half of it. So, you get about 3%; half of of what one may naively expect at a rate of 6.x. I hasten to disagree! If I put in £4000 in the 5 year market and after say 2 years I have £2000 worth of capital still invested l will still be getting 6% but on £2000 not £4000. A bit like regular savers in reverse!
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Post by Badly Drawn Stickman on Feb 5, 2019 23:08:50 GMT
Loans on the 5y market amortise. You get interest and a fraction of the capital back in regular intervals (you can find the repayment plans if you search for them in the loan details). Because that continuously repaid fraction reduces the capital you get interest on over time, you don't get 6.x% on of the full initial amount. Think of a rectangle - capital over time. For a non-amortising loan you get interest on the same capital all the time, 6.x%; for an amortising loan cut the rectangle along the diagonal for linear drawdown. That leaves you with half of it. So, you get about 3%; half of of what one may naively expect at a rate of 6.x. I hasten to disagree! If I put in £4000 in the 5 year market and after say 2 years I have £2000 worth of capital still invested l will still be getting 6% but on £2000 not £4000. A bit like regular savers in reverse! Not quite, it does totally depend on what you class as income on the money. RS do give you a repayment schedule so its fairly easy to see how it pans out. If you were just looking at taking the interest as income and looking for an equal monthly figure, you would need to reinvest a certain amount each month to balance it out over 5 years. That was the planning bit. Edit. Obviously that continually extends the 5 years, so knowing when you intend to die is useful. Another Edit. equally obviously as a simple mathematical model, it takes no account of platform performance and changes.
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corto
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Post by corto on Feb 6, 2019 8:34:05 GMT
Loans on the 5y market amortise. You get interest and a fraction of the capital back in regular intervals (you can find the repayment plans if you search for them in the loan details). Because that continuously repaid fraction reduces the capital you get interest on over time, you don't get 6.x% on of the full initial amount. Think of a rectangle - capital over time. For a non-amortising loan you get interest on the same capital all the time, 6.x%; for an amortising loan cut the rectangle along the diagonal for linear drawdown. That leaves you with half of it. So, you get about 3%; half of of what one may naively expect at a rate of 6.x. I hasten to disagree! If I put in £4000 in the 5 year market and after say 2 years I have £2000 worth of capital still invested l will still be getting 6% but on £2000 not £4000. A bit like regular savers in reverse! I responded to gareot who emphasised that what he gets out of 5y loans is actually much less than the headline rate. Not realising that these loans are amortising one may expect 300£ on 1000£ at 6% whereas it will be only about half of that. The rectangle example explains this graphically. Of course, one always get 6%, but on a decreasing capital. The construction is useful to provide a constant stream of income. If one checks a 5y repayment schedule it shows that the situation is actually a bit more complicated than explained here, because RS keeps the monthly repayments exactly constant. The example above assumes constant drawdown of the capital plus interest on the remaining capital. This results in a difference of the order of the level of interest, a few percent.
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pikestaff
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Post by pikestaff on Feb 6, 2019 9:26:46 GMT
Loans on the 5y market amortise. You get interest and a fraction of the capital back in regular intervals (you can find the repayment plans if you search for them in the loan details). Because that continuously repaid fraction reduces the capital you get interest on over time, you don't get 6.x% on of the full initial amount. Think of a rectangle - capital over time. For a non-amortising loan you get interest on the same capital all the time, 6.x%; for an amortising loan cut the rectangle along the diagonal for linear drawdown. That leaves you with half of it. So, you get about 3%; half of of what one may naively expect at a rate of 6.x. I hasten to disagree! If I put in £4000 in the 5 year market and after say 2 years I have £2000 worth of capital still invested l will still be getting 6% but on £2000 not £4000. A bit like regular savers in reverse! Correct! Returning to your OP, below is some more detail on withdrawal fees: Withdrawals from the holding account are always free. So are withdrawals of cash waiting to be lent. Mechanically, this is a cancellation of the order (returning the cash to the holding account) followed by withdrawal. Fees for withdrawing cash actually lent on the various markets (subject to new lenders being available) are currently: Rolling nil
1 year 0.3%
5 year 1.5%
These could change but I'd expect RS to give reasonable notice. The 5 year fee is relatively heavy to discourage gaming the system. They really want you to stay in for term. As to which market is best for you, that depends on your time horizon, and what you need to see you through to retirement. Is it the interest only, or are you looking for regular payments of interest and capital? 1 year loans are interest only, with all interest and capital repaid at the end. This may suit you if you are looking for interest only, or if you can budget for capital payments just once a year. [Edited for yorkman 's correction below.] 5 year loans are amortising, with level repayments comprising a mixture of capital and interest. (Like a repayment mortgage, later payments include more capital, and less interest, than early ones.) This may suit you if you are looking for a regular cash flow including capital. However, you will only get a fraction of the total back in the first year. If you intend to withdraw any part of your investment early, you will need to factor in the fee. On both the 1 and 5 year markets you have the option to reinvest either capital or capital + interest in the same or another account. Be aware that any money reinvested in either market starts a new 1 or 5 year term. You should also be aware that not all 1 or 5 year money is actually for that term. It could be shorter (including if you have replaced a previous lender), and will turn out to be shorter if the loan is repaid early.
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Post by yorkman on Feb 6, 2019 11:49:32 GMT
"1 year loans are interest only, with all capital repaid at the end."
Pikestaff - you are wrong on this point, or at least unclear. On the 1 year product both capital AND interest is paid at the end of the term. Interest is not paid during the term.
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