ablender
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Post by ablender on Oct 18, 2015 5:01:18 GMT
Hi, I am thinking of trying FS. I have not registered yet. I wanted to learn more before I make a move. Is there a secondary market? If yes how does it work?
I read that interest is paid at the end of the loan. Does this effect you negatively? If there is a secondary market, what happens to the interest if you sell or buy loan parts?
Thanks for answers.
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arbster
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Post by arbster on Oct 18, 2015 5:17:23 GMT
There's no secondary market - it's a lot like MoneyThing in that regard. All loans are short duration, with renewals where necessary, so you're never locked in for more than 6 months.
A small note that there's an under-publicised referral deal that you shouldn't miss out on. Not touting, just making sure you didn't miss out if you choose to sign up and you'd missed it.
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ablender
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Post by ablender on Oct 18, 2015 5:30:07 GMT
Thanks for the info.
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ablender
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Post by ablender on Oct 18, 2015 5:44:08 GMT
I am registering now.
arbster, is this the user name you use on FS?
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arbster
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Post by arbster on Oct 18, 2015 5:51:08 GMT
I am registering now. arbster, is this the user name you use on FS? You have mail.
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ablender
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Post by ablender on Oct 18, 2015 9:31:53 GMT
got it. Thanks.
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ramblin rose
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Post by ramblin rose on Oct 18, 2015 16:57:51 GMT
All loans are short duration, with renewals where necessary, so you're never locked in for more than 6 months. Actually not quite true. If a loan item isn't redeemed you are often locked in for a lot longer than 6 months until the item gets sold; sometimes it's quick, sometimes it takes a fair few months. More often than not you then get just about all of the outstanding interest up until the capital is returned, but recently we've had to wait 3 weeks for the return of capital and interest on an item after it got sold (which in turn was some months after the loan 'defaulted') and we don't expect to be getting interest for that final 3 weeks. You sometimes don't even get all of your capital back, let alone interest, in the case where it can't be sold for enough. Losses do occur occasionally, and lenders need to take this into account when deciding what rates they are prepared to accept when lending. (i.e. your overall return is going to be reduced somewhat from the headline rates on your basket of loans by the effect of losses - unless you are lucky enough not to have any). It's a while since I've said this, so it may be worth repeating (I'm going to anyway  ) - we haven't (I don't think) had a property loan default yet; we have no experience of how FS will deal with this, and experience from other platforms shows that it can take not just months, but years to get property situations dealt with. FS may turn out to handle it well, but we just don't know, so if having money tied up for long periods might be an issue for you, then you may wish to take that into account. I personally have chosen not to lend on FS property until I know how these situations will be dealt with - and that means my lending opportunities on FS are much fewer than they once were.
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arbster
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Post by arbster on Oct 18, 2015 17:04:53 GMT
All valid points, but experience suggests that in situations where a repayment is "late" or a full default is called, the loans are not tradable on other secondary markets anyway.
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Post by mrclondon on Oct 18, 2015 17:55:58 GMT
It's a while since I've said this, so it may be worth repeating (I'm going to anyway ) - we haven't (I don't think) had a property loan default yet; we have no experience of how FS will deal with this, and experience from other platforms shows that it can take not just months, but years to get property situations dealt with. FS may turn out to handle it well, but we just don't know, so if having money tied up for long periods might be an issue for you, then you may wish to take that into account. I personally have chosen not to lend on FS property until I know how these situations will be dealt with - and that means my lending opportunities on FS are much fewer than they once were. Quite correct, no property defaults yet. And until this last week all property loans have been renewed promptly at the 6 month mark(s) or redeeemed during a six month term. However an interesting comment appeared against the Salop Property loan that was due on 16th October: "Borrower has confirmed in final stages of selling property. Loan will be closed when sale completed - date to be advised once fixed. Interest will continue to accrue until repayment."
This is a very low LTV loan (15% first charge) so there is no real concern at this development, however it reinforces the comment made by ramblin rose that there is no guarantee that there will not be lengthy delays after the 6 months before you see your funds.
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ilmoro
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Post by ilmoro on Oct 18, 2015 18:24:11 GMT
It's a while since I've said this, so it may be worth repeating (I'm going to anyway ) - we haven't (I don't think) had a property loan default yet; we have no experience of how FS will deal with this, and experience from other platforms shows that it can take not just months, but years to get property situations dealt with. FS may turn out to handle it well, but we just don't know, so if having money tied up for long periods might be an issue for you, then you may wish to take that into account. I personally have chosen not to lend on FS property until I know how these situations will be dealt with - and that means my lending opportunities on FS are much fewer than they once were. Quite correct, no property defaults yet. And until this last week all property loans have been renewed promptly at the 6 month mark(s) or redeeemed during a six month term. However an interesting comment appeared against the Salop Property loan that was due on 16th October: "Borrower has confirmed in final stages of selling property. Loan will be closed when sale completed - date to be advised once fixed. Interest will continue to accrue until repayment."
This is a very low LTV loan (15% first charge) so there is no real concern at this development, however it reinforces the comment made by ramblin rose that there is no guarantee that there will not be lengthy delays after the 6 months before you see your funds.There have also been other occassions where loans have been given short extensions to fit in with borrower cash flows similiar to Salop. Dreamer print was given a short, ultimately futile extension, so was a Merc (not fully utilised) and microsculptures loan has also just been extended so its is clear that FS, like SS, have some discretion to extend loans outside of formal renewals. Not property but do illustrate that 6 months is not a guarenteed longest term
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ablender
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Post by ablender on Oct 18, 2015 19:41:20 GMT
Thanks for all the advice given. What I am understanding is that even though there may be securities, risks will always exist. If I have to decide between a 12% loan on a property security here, vs an 8% on another platform, I think this might be better; but I am very new to this idea of investing so I hope I am not doing a mistake.
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mikes1531
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Post by mikes1531 on Oct 19, 2015 0:33:20 GMT
In addition to the comments above, it's generally recommended that investments be diversified within a platform, meaning your whole FS investment should be spread among a number of loans, and among various loan types -- such as jewellery, cars, property, art. This also can introduce another reason why your actual return won't match the return on your loans, namely that some of your investment money will be sitting idle in your account earning nothing while you wait for a suitable investment opportunity to come along, effectively diluting your return.
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Post by Deleted on Oct 19, 2015 8:22:26 GMT
In my mind the objective is to diversify. (full stop), while this has been a struggle (which I have failed at) I have aimed to minimise each loan to less than 1% of my total investment in P2P, in reality this means it takes time. I also wanted no one portal to be more than 25% of total investment. I also find it is best to read the blurb (no blurb, I allow myself 5% to be loaned to non-blurb loans) that comes with each loan and try and imagine myself in the shoes of the person who wrote it. I then ask my new self: 1) Do I really believe the cash flow to pay off this loan is going to be easy to provide 2) have I thought through what could go wrong and stop me paying off the loan, have I mitigated against it If I see anything like a problem I stop reading and leave the loan alone (sic). Yes, I've had some defaults, but then again too few to mention (fingers crossed, wood touched etc). All this requires an investment in time and some patience. I recommend the investment of time and the investment of money. Those who just think this is a money in, money out scheme do not understand that ..... "all loans are equal, but some loans are more equal than others"  |
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merlin
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Post by merlin on Oct 20, 2015 9:34:31 GMT
Thanks for all the advice given. What I am understanding is that even though there may be securities, risks will always exist. If I have to decide between a 12% loan on a property security here, vs an 8% on another platform, I think this might be better; but I am very new to this idea of investing so I hope I am not doing a mistake. Remember human nature is not to learn from getting things right but rather getting things wrong. However there is a way round this and that is to watch others getting things wrong. Remember if you are into lending at high rates of interest sooner or later you will burn a figure or two and you need to factor this into your lending strategy.
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) - we haven't (I don't think) had a property loan default yet; we have no experience of how FS will deal with this, and experience from other platforms shows that it can take not just months, but years to get property situations dealt with. FS may turn out to handle it well, but we just don't know, so if having money tied up for long periods might be an issue for you, then you may wish to take that into account. I personally have chosen not to lend on FS property until I know how these situations will be dealt with - and that means my lending opportunities on FS are much fewer than they once were.
