kulerucket
Member of DD Central
Posts: 336 
Likes: 93
|
Post by kulerucket on Jan 17, 2017 18:38:02 GMT
Are there any disadvantages to selling a loan just before the end? I have only just started so I'm not sure exactly how interest is paid on sold loans. I see that MTAG563 is being repaid today, yet there is still buying and selling going on. If I buy and sell in between interest payments, do I loose all of the interest?
|
|
SteveT
Member of DD Central
Posts: 6,873
Likes: 7,918
|
Post by SteveT on Jan 17, 2017 18:56:16 GMT
No, lenders receive interest for the number of days they own the loanpart (daily trigger point = midnight)
|
|
ali
Member of DD Central
Posts: 313
Likes: 311
|
Post by ali on Jan 17, 2017 19:00:14 GMT
No, lenders receive interest for the number of days they own the loanpart (daily trigger point = midnight) ... and in the case of loans with minimum interest terms (eg., MTAG563 and MTAG575), the holder of the loan at repayment also receives interest on the number of days remaining of that term.
|
|
|
|
Post by GSV3MIaC on Jan 17, 2017 19:15:35 GMT
Hence the disadvantage of selling these just before the end, you don't get the extra guaranteed interest. Well worth buying today, if you had spare cash.
|
|
stevio
Member of DD Central
Posts: 2,065
Likes: 894
|
Post by stevio on Jan 17, 2017 19:17:39 GMT
Hence the disadvantage of selling these just before the end, you don't get the extra guaranteed interest. Well worth buying today, if you had spare cash. Can't remember which, but one only has one days interest
|
|
kulerucket
Member of DD Central
Posts: 336
Likes: 93
|
Post by kulerucket on Jan 17, 2017 20:00:08 GMT
I see, so it's only worth buying if it's an early payment? In this case, it's just one day. It seems that in this case it's worth selling to give up the extra interest in exchange for protection against default.
|
|
ali
Member of DD Central
Posts: 313
Likes: 311
|
Post by ali on Jan 17, 2017 20:06:55 GMT
I see, so it's only worth buying if it's an early payment? In this case, it's just one day. It seems that in this case it's worth selling to give up the extra interest in exchange for protection against default. In most cases, that's probably true. However, in this case we knew that the loan was moving to SS and that it had "gone live" there. There was always a chance that SS could reject the loan at a very late stage due to some problem they found during their DD, but the chance seemed very slim. As far as I was concerned, these two loans (and the 14% one in particular) were very high gain for very low risk. The only real argument against them was that the actual amount of money earnt was small so it was only worth doing if you had spare cash lying around. I did, so I bought lots of lovely 14%. Yummy!
|
|
dermot
Member of DD Central
Posts: 862
Likes: 517
|
Post by dermot on Jan 18, 2017 12:09:59 GMT
I see, so it's only worth buying if it's an early payment? In this case, it's just one day. It seems that in this case it's worth selling to give up the extra interest in exchange for protection against default. In most cases, that's probably true. However, in this case we knew that the loan was moving to SS and that it had "gone live" there. There was always a chance that SS could reject the loan at a very late stage due to some problem they found during their DD, but the chance seemed very slim. As far as I was concerned, these two loans (and the 14% one in particular) were very high gain for very low risk. The only real argument against them was that the actual amount of money earnt was small so it was only worth doing if you had spare cash lying around. I did, so I bought lots of lovely 14%. Yummy! Me too - and snapped up a few more bits over the last week or so.
|
|
GeorgeT
Member of DD Central
Posts: 1,321
Likes: 1,575
|
Post by GeorgeT on Jan 21, 2017 12:14:26 GMT
Yes it was an amazing investment earning 14% on the Bradford loan with the excellent Money Thing.
I was fortunate to be heavily invested not only in the 14% tranche but also in the 13% tranche. now the borrower has refinanced with saving stream and we don't know the exact terms and the new interest rate they are paying but saving stream are giving us 11% on the development and MT gave us 14% on the same development funding and just about for the same risk.
oh how I love money thing and I hope Ed and the crew can come forward with some new busines soon paying over 12% again so they stay ahead of the curve.
|
|
littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,017
Likes: 1,835
|
Post by littleoldlady on Jan 22, 2017 12:17:56 GMT
I see, so it's only worth buying if it's an early payment? In this case, it's just one day. It seems that in this case it's worth selling to give up the extra interest in exchange for protection against default. You only get 'protection against default' if you withdraw all cash from the platform. If you re-invest in a longer term loan you merely transfer the risk into another loan. IMO the other loan is inherently more risky, because in the unfortunate but probably inevitable, given sufficient time, event of platform failure, or a scare about it (think Northern Rock) causing a rush to the exit the shorter your loan terms the better. I know that this is a minority view on this forum, and so long as the present benign conditions hold the strategy will work - however in benign conditions it is not really necessary anyway. When the next crunch comes liquidity may disappear as quickly as an Icelandic bank balance.
|
|
archie
Posts: 1,838
Likes: 1,842
|
Post by archie on Jan 22, 2017 12:50:04 GMT
On MT I hold until the end as you may well miss out on an extension, the 18% one springs to mind.  |
|
ben
Posts: 2,020
Likes: 589
|
Post by ben on Jan 22, 2017 13:00:58 GMT
I see, so it's only worth buying if it's an early payment? In this case, it's just one day. It seems that in this case it's worth selling to give up the extra interest in exchange for protection against default. You only get 'protection against default' if you withdraw all cash from the platform. If you re-invest in a longer term loan you merely transfer the risk into another loan. IMO the other loan is inherently more risky, because in the unfortunate but probably inevitable, given sufficient time, event of platform failure, or a scare about it (think Northern Rock) causing a rush to the exit the shorter your loan terms the better. I know that this is a minority view on this forum, and so long as the present benign conditions hold the strategy will work - however in benign conditions it is not really necessary anyway. When the next crunch comes liquidity may disappear as quickly as an Icelandic bank balance. Could not agree with this post any more, there is a lot of people that seem to invest with intention of selling a, as you say when times are good like now it is pretty easy but all it takes is a default or two and everyone panicks sells, S is the best example of this when ever there is a lot for saleand not being brought instantly people start panicking. I know peoples situation cahnge and sometimes you have to sell for what ever reason but never understood why people invest with the intention of selling, I would never invest in anything I had no intention of holding to end.
|
|
|
|
Post by GSV3MIaC on Jan 22, 2017 13:11:27 GMT
/mod hat off
I would never invest in something (on MT, or SS**) I was not HAPPY to hold to the end (if necessary), but I wouldn't say I 'intend' to .. I 'intend' to hold it as long as nothing better is available, which is likely to change over time (with new loans, and with the liquidity situation changing). 'The end' also has to be seen as a rather mobile feast on many of these property related loans. At some point during the life of a loan new information may come to light which changes my happiness level (has happened a couple of times on SS, and even once here with the football club loan).
** Actually on FC I invested in several Es which I would not have been happy to hold until the end, (or even past month 3), but liquidity there is pretty much guaranteed by the dumb autobiddy system.
|
|
|
|
Post by Deleted on Jan 22, 2017 13:22:10 GMT
I still like to drift out of owning SS once the loan "should" have finished. Not in a rush and depending on new deals/old deals etc. While many of SS deals are well described and sensible, there is still an air of risk with them that I don't like, see the debate on the business practices of some of the borrowers that we had late last year. I'm afraid "mud has stuck" on SS's image in my mind.
|
|
archie
Posts: 1,838
Likes: 1,842
|
Post by archie on Jan 22, 2017 13:53:35 GMT
I still like to drift out of owning SS once the loan "should" have finished. Not in a rush and depending on new deals/old deals etc. While many of SS deals are well described and sensible, there is still an air of risk with them that I don't like, see the debate on the business practices of some of the borrowers that we had late last year. I'm afraid "mud has stuck" on SS's image in my mind. I always get out of SS loans. Most platforms I will hold until the end although sometimes I reduce the holding as the days elapse. Some platforms tax considerations confuse things.
|
|
