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Post by khampson on Oct 19, 2016 19:21:04 GMT
Hi, Totally new here and was looking for anllittle bit of help, can anyone help me understand tranche , from what I see it is several loan parts to the same borrower? So if a borrower has say 5 tranches and I lend to each one if a loan goes bad all 5 loans go bad? So i would need to lend smaller amounts over all 5 to limit my exposur?
Also when is iinterest paid, is it on the aanniversary of the start date or the end date?
And lastly if I only own a loan part for a few days and sell it on the secondary market before a payment is made will I receive any interest for the time I owned the loan part.?
Thanks Keith
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 19, 2016 19:25:20 GMT
Hi, Totally new here and was looking for anllittle bit of help, can anyone help me understand tranche , from what I see it is several loan parts to the same borrower? So if a borrower has say 5 tranches and I lend to each one if a loan goes bad all 5 loans go bad? So i would need to lend smaller amounts over all 5 to limit my exposur? Also when is iinterest paid, is it on the aanniversary of the start date or the end date? And lastly if I only own a loan part for a few days and sell it on the secondary market before a payment is made will I receive any interest for the time I owned the loan part.? Thanks Keith Interest on anniversary of end date Yes, interest for time held on normal payment date Tranches. 4 variations MT funds loans from a float - large loans exceed float so done in tranches, all tranches rank equally... Loan split. to allow borrower to repay in variable periods eg wine cellar all tranches equal Loan released in tranches as borrower requires funds in stages eg development loans, all tranches rank equally Loan is split between tranches with different risk but different rate. Either a second or third charge or subordinate loan on existing charge ... not all tranches rank equally eg Birkenhead or Prestbury... LTv is clearly indicated and associated risk
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fp
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Post by fp on Oct 19, 2016 19:36:31 GMT
Hi, Totally new here and was looking for anllittle bit of help, can anyone help me understand tranche , from what I see it is several loan parts to the same borrower? So if a borrower has say 5 tranches and I lend to each one if a loan goes bad all 5 loans go bad? So i would need to lend smaller amounts over all 5 to limit my exposur? Also when is iinterest paid, is it on the aanniversary of the start date or the end date? And lastly if I only own a loan part for a few days and sell it on the secondary market before a payment is made will I receive any interest for the time I owned the loan part.? Thanks Keith This would depend on the loan, some loans have two rates on interest, the higher risk loans are the ones paying the higher rate and will suffer first in the case of any loss. You will receive any accrued interest for the time you owned it. I'm not sure if there is an FAQ thread for MT yet
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ali
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Post by ali on Oct 19, 2016 19:41:43 GMT
Hi, Totally new here and was looking for anllittle bit of help, can anyone help me understand tranche , from what I see it is several loan parts to the same borrower? So if a borrower has say 5 tranches and I lend to each one if a loan goes bad all 5 loans go bad? So i would need to lend smaller amounts over all 5 to limit my exposur? Also when is iinterest paid, is it on the aanniversary of the start date or the end date? And lastly if I only own a loan part for a few days and sell it on the secondary market before a payment is made will I receive any interest for the time I owned the loan part.? Thanks Keith Tranche just means part. Typically a loan is split into several tranches because (i) MT doesn't have a big enough float to pay the whole loan out in one go, (ii) later tranches are dependent on a report from a monitoring surveyor to be released, or (iii) because the loan is being offered at different risk levels. In all three cases, spreading yourself over multiple tranches doesn't reduce your exposure. In the first two cases it normally makes no difference and in the last case you would only mix the two tranches if you wanted a risk level that was in between the two levels offered in the two tranches. All this should be clear from the loan details, but if you let us know which loan you are looking at, I'm sure somebody will take you through it.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 19, 2016 19:41:54 GMT
Hi, Totally new here and was looking for anllittle bit of help, can anyone help me understand tranche , from what I see it is several loan parts to the same borrower? So if a borrower has say 5 tranches and I lend to each one if a loan goes bad all 5 loans go bad? So i would need to lend smaller amounts over all 5 to limit my exposur? Also when is iinterest paid, is it on the aanniversary of the start date or the end date? And lastly if I only own a loan part for a few days and sell it on the secondary market before a payment is made will I receive any interest for the time I owned the loan part.? Thanks Keith This would depend on the loan, some loans have two rates on interest, the higher risk loans are the ones paying the higher rate and will suffer first in the case of any loss. You will receive any accrued interest for the time you owned it. I'm not sure if there is an FAQ thread for MT yet I started but got distracted 
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Post by khampson on Oct 19, 2016 19:53:29 GMT
I have bought a £10 part of the (FP456) P****** R******** B (Tranche 7 of 9) - 42 month
I have also bought a £10 part of the (FP453) P****** R******** B (Tranche 4 of 9) - 24 month term
As I see it if 1 loan defaults surely the other one will too meaning I have £20 invested in a loan that defaults, if they can't make a payment on one they won't pay the other?
Thanks
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Post by khampson on Oct 19, 2016 20:00:58 GMT
Hi, Totally new here and was looking for anllittle bit of help, can anyone help me understand tranche , from what I see it is several loan parts to the same borrower? So if a borrower has say 5 tranches and I lend to each one if a loan goes bad all 5 loans go bad? So i would need to lend smaller amounts over all 5 to limit my exposur? Also when is iinterest paid, is it on the aanniversary of the start date or the end date? And lastly if I only own a loan part for a few days and sell it on the secondary market before a payment is made will I receive any interest for the time I owned the loan part.? Thanks Keith This would depend on the loan, some loans have two rates on interest, the higher risk loans are the ones paying the higher rate and will suffer first in the case of any loss. You will receive any accrued interest for the time you owned it. I'm not sure if there is an FAQ thread for MT yet I thought mt funds loans from the lenders (us) so what float is needed to fund loans, am I missing something? If someone requires a loan, mt post a listing and the lenders fund? Or do mt fund the loan and then put it to the lenders?
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fp
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Post by fp on Oct 19, 2016 20:05:34 GMT
This would depend on the loan, some loans have two rates on interest, the higher risk loans are the ones paying the higher rate and will suffer first in the case of any loss. You will receive any accrued interest for the time you owned it. I'm not sure if there is an FAQ thread for MT yet I thought mt funds loans from the lenders (us) so what float is needed to fund loans, am I missing something? If someone requires a loan, mt post a listing and the lenders fund? Or do mt fund the loan and then put it to the lenders? MT initially fund the loan from their own cash reserves, they then list the loan for lenders to buy
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 19, 2016 20:06:09 GMT
I have bought a £10 part of the (FP456) P****** R******** B (Tranche 7 of 9) - 42 month I have also bought a £10 part of the (FP453) P****** R******** B (Tranche 4 of 9) - 24 month term As I see it if 1 loan defaults surely the other one will too meaning I have £20 invested in a loan that defaults, if they can't make a payment on one they won't pay the other? Thanks yes, its all one loan, split a) due to MT float limit so 2 seperate groups of tranches b) to allow borrower to phase capital repayments at 6 month intervals. All tranches rank the same so only risk variation is early tranches might have repaid so LTV on later tranches would fall, until then no difference. One defaults, all defaults
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 19, 2016 20:09:00 GMT
This would depend on the loan, some loans have two rates on interest, the higher risk loans are the ones paying the higher rate and will suffer first in the case of any loss. You will receive any accrued interest for the time you owned it. I'm not sure if there is an FAQ thread for MT yet I thought mt funds loans from the lenders (us) so what float is needed to fund loans, am I missing something? If someone requires a loan, mt post a listing and the lenders fund? Or do mt fund the loan and then put it to the lenders? MT fund loans first before releasing to lenders (except BPF who fund themselves) so interest earnt from invest point
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Oct 19, 2016 21:02:55 GMT
Hi, Totally new here and was looking for anllittle bit of help, can anyone help me understand tranche , from what I see it is several loan parts to the same borrower? So if a borrower has say 5 tranches and I lend to each one if a loan goes bad all 5 loans go bad? So i would need to lend smaller amounts over all 5 to limit my exposur? Also when is iinterest paid, is it on the aanniversary of the start date or the end date? And lastly if I only own a loan part for a few days and sell it on the secondary market before a payment is made will I receive any interest for the time I owned the loan part.? Thanks Keith Yes, interest for time held on normal payment date Tranches. 4 variations MT funds loans from a float - large loans exceed float so done in tranches, all tranches rank equally... Loan split. to allow borrower to repay in variable periods eg wine cellar all tranches equal Loan released in tranches as borrower requires funds in stages eg development loans, all tranches rank equally Loan is split between tranches with different risk but different rate. Either a second or third charge or subordinate loan on existing charge ... not all tranches rank equally eg Birkenhead or Prestbury... LTv is clearly indicated and associated risk I presume you don't mean the anniversary.
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Post by khampson on Oct 20, 2016 0:19:53 GMT
So would investing £50 into a loan that has 5 tranches would be the same risk as invest £10 into each tranches?
Also I see a loan that says 4th drawdown does this mean a loan that is similar to traches?
Sorry but it's all very confusing to a novice.
Thank you
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ali
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Post by ali on Oct 20, 2016 6:56:29 GMT
So would investing £50 into a loan that has 5 tranches would be the same risk as invest £10 into each tranches? Also I see a loan that says 4th drawdown does this mean a loan that is similar to traches? Sorry but it's all very confusing to a novice. Thank you Investing into multiple tranches would normally be the same risk. The exception is where the loan has been split into a low-risk tranche A and a high-risk tranche B. An example on MT at present is BPF536/BPF541 (the low-risk tranches offering 10% with an LTV of 46%) and BPF537/BPF542 (the high-risk tranches offering 13% and an LTV of 69%). If this loan defaulted and the security had to be sold for somewhere between 46% and 69% of the loan total (after fees), then tranche A would get all their capital back and tranche B would lose some of their capital. BPF553 will be the 4th drawdown that you refer to and yes, it's basically the same as a tranche. In this case. If you read the notes, you will see that it says "Against the most recent valuation on the security totalling £6,350,000". This means that a monitoring surveyor has visited the site since the 3rd drawdown and re-valued the security based on the work that has been done to date at a higher value. This allows the loan total to be increased while staying within the agreed maximum LTV of 59.5% (all of this is carefully detailed in the details of the loan for you to read, but I understand it can be a hard to take it all in at first). In due course (and see the pipeline thread for details of expected dates) there will be a 5th drawdown on this loan.
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Post by khampson on Oct 20, 2016 10:31:56 GMT
thank you for your replies, So I have a loan that has 10 tranche in total, it has a ltv of 32%, does this mean the ltv of all the tracnhes put together or just the individual tranche
Keith
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ali
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Post by ali on Oct 20, 2016 10:43:13 GMT
thank you for your replies, So I have a loan that has 10 tranche in total, it has a ltv of 32%, does this mean the ltv of all the tracnhes put together or just the individual tranche Keith In the particular case you refer to (FP421-FP430), these 10 tranches rank "pari passu" with a further 9 tranches. Thus the total loan is 10*£50,000+9*£50,000=£950,000 and the value of the security is stated to be £2,900,000 giving an LTV of 950,000/2,900,000 = 32.76%. This is the LTV of both the individual tranches and of the loan as an entirety.
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