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Post by p2plender on Mar 3, 2014 9:14:28 GMT
and if so is it easily done? Pondering putting a chunk into 5 year market for 8 months rather than keep rolling over in 1 month market. Just wondering if I'll be able to liquidate holding easily enough. It will be several thousand pounds I imagine.
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spiral
Member of DD Central
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Post by spiral on Mar 3, 2014 11:54:01 GMT
RS is set up to deter this method of investing. AIUI if you sell out before term, you get an equivalent rate to that for the market that RS have that most closly resembles your investment term i.e. monthly, yearly, 3 yearly or 5 years. As you would be selling out at 8 months, the term you would get is the monthly rate as you would not have exceeded 1 year. This means that as you have received the interest up front, you get whacked with a big fee. e.g. if the 5 year rate is 5.7 and the 1 month rate is 1.7, you will have to repay an equivalent of 4% in addition to the sell out fees.
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Post by p2plender on Mar 3, 2014 12:18:52 GMT
ok thanks, I'll stick to monthly bond then.
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Post by davee39 on Mar 3, 2014 13:44:04 GMT
This is NOT a recommendation but you may want to note that Wellesley offer 3.75% over 6 months.
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Post by p2plender on Mar 3, 2014 15:50:32 GMT
thanks I'll take a look.
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angrysaveruk
Member of DD Central
Back and to the left..
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Post by angrysaveruk on Mar 12, 2014 16:38:09 GMT
Zopa is the best place if you want to withdraw early in my opinion. 1% transaction fee and you get 5% on a 5 year deposit atm. This is the reason I have some money invested with them at 5 years even though their rate is not as attractive as Rate Setter.
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wysiati
Member of DD Central
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Post by wysiati on Mar 12, 2014 18:31:42 GMT
I recently got some quotes for liquidation of my 3 and 5 yr RS loans. The effective hit to exit was c.5.5% on the 3yr loans (which have 12 months remaining) and 8.1% on the 5yr loans (which have 36 months remaining). That level of penalty is ThinCats-eque and has deterred me from looking at investing any more in RS. Thankfully, RS has a helpful setting whereby any normal monthly repayments can be automatically paid away to your nominated account which saves on admin time, so I have opted for that, along with praying for prepayments from borrowers.
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pikestaff
Member of DD Central
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Post by pikestaff on Mar 12, 2014 23:47:51 GMT
RS is set up to deter this method of investing. AIUI if you sell out before term, you get an equivalent rate to that for the market that RS have that most closly resembles your investment term i.e. monthly, yearly, 3 yearly or 5 years. As you would be selling out at 8 months, the term you would get is the monthly rate as you would not have exceeded 1 year. This means that as you have received the interest up front, you get whacked with a big fee. e.g. if the 5 year rate is 5.7 and the 1 month rate is 1.7, you will have to repay an equivalent of 4% in addition to the sell out fees. In addition to which, I think there is a further adjustment (which could go either way) to reflect the effect of interest rate movements on RS's cost of refinancing the loans. If rates are lower than when you made the loan there will be an adjustment in your favour. Conversely, if rates have gone up, you will have to pay more. Bad news for anyone who lent last May/June, when rates were around 5%. The message is, 5 year money is not a free lunch. Only commit for 5 years if you are (a) happy to commit for that long, and/or (b) happy to pay the penalty to get your money out early if you need it.
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