michaelc
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Post by michaelc on Jul 19, 2021 19:58:25 GMT
The problem with these polls is that they have been catastrophically wrong in the past (I recall Ly, Col and MT all coming top in previous polls).
I am pulling out of P2P and my advice to others would be don't invest in the platforms that finish in the top 3 places
Ha ha, that is so true. Guess I should be relieved that The Money Platform isn't even on the list. Kevin. Thoughts Greenwood2 ?
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Greenwood2
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Post by Greenwood2 on Jul 19, 2021 20:10:44 GMT
Ha ha, that is so true. Guess I should be relieved that The Money Platform isn't even on the list. Kevin. Thoughts Greenwood2 ? Probably the same as yours.
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Jul 25, 2021 11:01:01 GMT
The problem with low rate platforms (apart from platform risk) is the time it takes to accumulate enough interest to be able to tolerate a "black swan" loan which unexpectedly goes sour. If you invest the same amount in each loan in a 4% platform it takes 25 loan-years to cater for a single total loss. On a 12% platform it takes only 8.5 loan-years ie with sufficient diversification just a matter of months. Anyone investing this way with L, C, FS or MT in their early years could have exited at the first sign of trouble well in the black even if they had a large loss towards the end. With LP you are at risk for much longer before you reach the point where a loss no longer wipes out your accumulated interest.
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Post by Ace on Jul 25, 2021 14:24:54 GMT
The problem with low rate platforms (apart from platform risk) is the time it takes to accumulate enough interest to be able to tolerate a "black swan" loan which unexpectedly goes sour. If you invest the same amount in each loan in a 4% platform it takes 25 loan-years to cater for a single total loss. On a 12% platform it takes only 8.5 loan-years ie with sufficient diversification just a matter of months. Anyone investing this way with L, C, FS or MT in their early years could have exited at the first sign of trouble well in the black even if they had a large loss towards the end. With LP you are at risk for much longer before you reach the point where a loss no longer wipes out your accumulated interest. But considered another way... Since your funds on LP are fully diversified over roughly 100 loans, any single "black Swan" loan would on average be recouped in just 3 months by the rest of your portfolio. (Since, on average only 1% of your funds will be in any one loan, and at 4% rates you would recoup that in a quarter of a year). If you were unlucky enough for the largest loan on the platform to be the one that went "black Swan" and be a total loss, it would take 16.3 months to recoup. In practice it seems very unlikely that any loan on LP would end up as a total loss, but, unfortunately, unlikely doesn't equal impossible.
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Jul 25, 2021 16:48:30 GMT
The problem with low rate platforms (apart from platform risk) is the time it takes to accumulate enough interest to be able to tolerate a "black swan" loan which unexpectedly goes sour. If you invest the same amount in each loan in a 4% platform it takes 25 loan-years to cater for a single total loss. On a 12% platform it takes only 8.5 loan-years ie with sufficient diversification just a matter of months. Anyone investing this way with L, C, FS or MT in their early years could have exited at the first sign of trouble well in the black even if they had a large loss towards the end. With LP you are at risk for much longer before you reach the point where a loss no longer wipes out your accumulated interest. But considered another way... Since your funds on LP are fully diversified over roughly 100 loans, any single "black Swan" loan would on average be recouped in just 3 months by the rest of your portfolio. (Since, on average only 1% of your funds will be in any one loan, and at 4% rates you would recoup that in a quarter of a year). If you were unlucky enough for the largest loan on the platform to be the one that went "black Swan" and be a total loss, it would take 16.3 months to recoup. In practice it seems very unlikely that any loan on LP would end up as a total loss, but, unfortunately, unlikely doesn't equal impossible. Good point. I had overlooked the auto-diversification feature of LP. Please read my post replacing 'LP' with 'a typical low rate platform with DIY diversification'. Even with LP it takes much longer to reach that happy point where your accumulated interest is greater than the amount remaining invested. That's when you can really relax.
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Post by df on Jul 25, 2021 18:30:23 GMT
But considered another way... Since your funds on LP are fully diversified over roughly 100 loans, any single "black Swan" loan would on average be recouped in just 3 months by the rest of your portfolio. (Since, on average only 1% of your funds will be in any one loan, and at 4% rates you would recoup that in a quarter of a year). If you were unlucky enough for the largest loan on the platform to be the one that went "black Swan" and be a total loss, it would take 16.3 months to recoup. In practice it seems very unlikely that any loan on LP would end up as a total loss, but, unfortunately, unlikely doesn't equal impossible. Good point. I had overlooked the auto-diversification feature of LP. Please read my post replacing 'LP' with 'a typical low rate platform with DIY diversification'. Even with LP it takes much longer to reach that happy point where your accumulated interest is greater than the amount remaining invested. That's when you can really relax. I've reached that point with FC, Zopa and HC, but that's only because I've stopped investing with them few years ago. With other platforms that I'm active with (ABL, UB, AC, Rebs), after 4 and half years I'm still far from that point of relaxation.
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Balder
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Post by Balder on Jul 26, 2021 8:12:02 GMT
Only use Loan Pad and Ablrate now and not investing new funds. All my ISA investment went into Fundsmith this year (been with them for several years now). Fundsmith is up about 15% this year and is still averaging 18% pa since inception. I am now of the opinion why bother with P2P!
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alibaba
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Post by alibaba on Oct 13, 2021 20:27:30 GMT
Just had 10k capital written off on one loan on the HNW site no interest paid for three years, as with other p2p sites down to totally unrealistic valuation, time for a rethink on investing in p2p.
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Post by Ace on Oct 13, 2021 20:45:05 GMT
Just had 10k capital written off on one loan on the HNW site no interest paid for three years, as with other p2p sites down to totally unrealistic valuation, time for a rethink on investing in p2p. Wow, sorry to hear that. Can you say any more about whether that was a total loss or whether that was a percentage of a larger loan? HNW normally have a first loss tranche, so it's hard to see how a total loss occurs unless the security turns out to be worthless, or eaten up by fees.
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ozboy
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Post by ozboy on Oct 13, 2021 21:23:28 GMT
Just had 10k capital written off on one loan on the HNW site no interest paid for three years, as with other p2p sites down to totally unrealistic valuation, time for a rethink on investing in p2p.Also time for a rethink on the integrity of RICS " Professional" Valuers?
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alibaba
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Post by alibaba on Oct 14, 2021 7:24:37 GMT
Just had 10k capital written off on one loan on the HNW site no interest paid for three years, as with other p2p sites down to totally unrealistic valuation, time for a rethink on investing in p2p. Wow, sorry to hear that. Can you say any more about whether that was a total loss or whether that was a percentage of a larger loan? HNW normally have a first loss tranche, so it's hard to see how a total loss occurs unless the security turns out to be worthless, or eaten up by fees. This was the loss of my total investment in this loan 10k and in three years not one penny interest paid
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Post by Ace on Oct 15, 2021 17:03:06 GMT
Wow, sorry to hear that. Can you say any more about whether that was a total loss or whether that was a percentage of a larger loan? HNW normally have a first loss tranche, so it's hard to see how a total loss occurs unless the security turns out to be worthless, or eaten up by fees. This was the loss of my total investment in this loan 10k and in three years not one penny interest paid Fortunately for me, I wasn't a participant in this loan. It wasn't through any smartness on my part. It was just that it was released before I participated on the HNW platform. From the little information that I've been able to glean, I would probably have been happy to lend on it. So, I wanted to look into it to see if there was anything I could learn about how to pick future loans. I'm going to be fairly cautions with the details, as I'm unsure exactly which bits are confidential, but I thought it would be a useful exercise in seeing what could go wrong with this type of Lending. So, here's what MAY have happened: This was a loan secured via a 2nd charge on a property and some other non-property based security. HNW were also the 1st charge holders to the same property via another loan. So it was really a single charge to HNW with this loan subordinate to the other HNW loan. On the face of it the loan was relatively safe as it was at a fairly low LTV, and there was no third party involved to complicate things, as HNW held the single property charge for both loans. The loans defaulted early on, about 4 to 5 years ago, and for various reasons the recovery took way too long, not least some delays would have been due to Covid. The rate for the first loan, including HNW's share will have been fairly high. With 4 to 5 years of unpaid interest building up, the headroom above the LTV for the first loan would have been totally eroded. Then there's the administrator fees to account for, and some other costs to do with an issue with the security property that needed resolving before it could be disposed of. So it's not hard to see that, in these circumstances, there would be no value left in the property to repay the second loan, even if the original property valuation had been spot on, which it may well have been. It seems that the extra, non property based, security element for the second loan totally evaporated. I can't really add any info here as I'm unsure of the details, suffice to say that a large part of it was claimed by HMRC. My understanding is that HNW have subsequently modified their T&Cs such that in future the capital of the second loan would be paid in priority to the interest on the first loan, which might well have allowed the second loan to have received a full capital repayment. Some takeaways for me here are: - I need to reconsider the maximum I'm prepared to lend on a single loan to limit the damage that a single rogue loan can cause.
- Assign zero value to any security that doesn't have a known legal and enforceable charge against it.
- Check the waterfall order for platforms where I lend on subordinated loans.
- Don't panic. This is a rare event and should be expected occasionally, even in a well curated portfolio (I've never got near to a100% loss in any of the thousands of property secured loans I've made so far).
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Post by overthehill on Oct 15, 2021 20:49:39 GMT
This was the loss of my total investment in this loan 10k and in three years not one penny interest paid Fortunately for me, I wasn't a participant in this loan. It wasn't through any smartness on my part. It was just that it was released before I participated on the HNW platform. From the little information that I've been able to glean, I would probably have been happy to lend on it. So, I wanted to look into it to see if there was anything I could learn about how to pick future loans. I'm going to be fairly cautions with the details, as I'm unsure exactly which bits are confidential, but I thought it would be a useful exercise in seeing what could go wrong with this type of Lending. So, here's what MAY have happened: This was a loan secured via a 2nd charge on a property and some other non-property based security. HNW were also the 1st charge holders to the same property via another loan. So it was really a single charge to HNW with this loan subordinate to the other HNW loan. On the face of it the loan was relatively safe as it was at a fairly low LTV, and there was no third party involved to complicate things, as HNW held the single property charge for both loans. The loans defaulted early on, about 4 to 5 years ago, and for various reasons the recovery took way too long, not least some delays would have been due to Covid. The rate for the first loan, including HNW's share will have been fairly high. With 4 to 5 years of unpaid interest building up, the headroom above the LTV for the first loan would have been totally eroded. Then there's the administrator fees to account for, and some other costs to do with an issue with the security property that needed resolving before it could be disposed of. So it's not hard to see that, in these circumstances, there would be no value left in the property to repay the second loan, even if the original property valuation had been spot on, which it may well have been. It seems that the extra, non property based, security element for the second loan totally evaporated. I can't really add any info here as I'm unsure of the details, suffice to say that a large part of it was claimed by HMRC. My understanding is that HNW have subsequently modified their T&Cs such that in future the capital of the second loan would be paid in priority to the interest on the first loan, which might well have allowed the second loan to have received a full capital repayment. Some takeaways for me here are: - I need to reconsider the maximum I'm prepared to lend on a single loan to limit the damage that a single rogue loan can cause.
- Assign zero value to any security that doesn't have a known legal and enforceable charge against it.
- Check the waterfall order for platforms where I lend on subordinated loans.
- Don't panic. This is a rare event and should be expected occasionally, even in a well curated portfolio (I've never got near to a100% loss in any of the thousands of property secured loans I've made so far).
2nd charge loans are wolves dressed in sheep. This was an unfortunate nightmare but the original HNW recovery priority is the norm as far as know.
It is for Proplend, don't know about Kuflink's multi-tiered loans and it will definitely be the case where multiple lenders are involved. It will depend on the default circumstances. For Proplend all the tranches are credited pro-rata if the seller pays off part of the loan or sells part of the security but I think this changes once the loan is defaulted and receivers are involved.
I have no confidence in 2nd charge loans, FS taught me that, fortunately it was only my fingers that were burned. I only have them now with ablrate + LLI with much smaller amounts than for a 1st charge. Having said that LLI are making their 2nd charge 12-17% loans look like investment product of the decade, that's called commentator's curse.
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sussexpeer
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Post by sussexpeer on Jan 29, 2022 11:42:31 GMT
I wonder where members are investing this year? (I can't make graphs.) It'll be interesting to see how the newer platforms like Easymoney, Lendary and Connective Lending are attracting new money versus the more established platforms like Loanpad, unbolted, Relendex and Proplend.
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sussexpeer
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If you don't make a plan, you'll end up where you're headed.
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Post by sussexpeer on Feb 8, 2022 16:01:34 GMT
I wonder where members are investing this year? (I can't make graphs.) It'll be interesting to see how the newer platforms like Easymoney, Lendary and Connective Lending are attracting new money versus the more established platforms like Loanpad, unbolted, Relendex and Proplend. Ok, if anyone was thinking of doing a new poll please scratch Connective Lending.
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