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Post by whitmanthecat on May 20, 2014 20:43:14 GMT
If everything goes as expected, loans should make the bullet repayment on the date in the repayment schedule. For bridging loans in particular, it's quite possible that will not happen. It can take time to get refinancing set up, so the borrowers should have the refinancing wheels in motion well before the end of the loan. If the loan redeems early, but is past the minimum charging period, it is straighforward for the accrued interest to be paid. If the minimum period hasn't been reached, this thread was unanswered link. It's clear that someone will get the full interest, but in the case of aftermarket trading, not clear who. However, if the AC drawdown experience is anything to go by, there are many sources of unexpected delay. I think it's quite possible that we will have redemption delays beyond the due date. I thought I had seen some of the credit reports make reference to a higher rate of interest in the event of redemption delay, but can't find it now on the loans I have. Is there a general rule on what happens here? |
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andy2001
Member of DD Central
Posts: 361 
Likes: 34
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Post by andy2001 on May 20, 2014 21:31:31 GMT
I think it must be who ever is holding the loan units when the early payment is made that gets the extra interest. The seller will get interest due only for the time they hold the loan. But It won't hurt for someone from Assetz to confirm this.
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Post by chris on May 20, 2014 21:55:43 GMT
I think it must be who ever is holding the loan units when the early payment is made that gets the extra interest. The seller will get interest due only for the time they hold the loan. But It won't hurt for someone from Assetz to confirm this. That is my understanding.
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Post by whitmanthecat on May 21, 2014 12:43:43 GMT
Thanks for this. It still leaves the question of late redemption.
There are three fair-sized bridging loans due to be repaid in the next month. I hold units in these, but at the time of writing there are also units on the aftermarket (that are changing hands).
From what I can tell by looking at the loan pages, the following would happen on early or late redemption. The late situation is in the event of delayed refinance as opposed to difficulty to repay:
An****** Bridging Loan:
Early: Minimum 4 month term now exceeded and so interest would only be payable to the redemption date.
Late: Not known
S**** M********* Bridging Loan:
Early: Not clear. Q&A response states the loan agreement will show the minimum term, but does not state what is in the loan agreement. Full interest has been retained, suggesting this might be payable in full on early redemption.
Late: Explicit rate increase from 1.25%pm to 1.75% pm
B***** Bridging Loan:
Early: Full interest payable even if redeemed early.
Late: Not known.
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Post by Ton ⓉⓞⓃ on May 21, 2014 16:23:06 GMT
Thanks for this. It still leaves the question of late redemption. There are three fair-sized bridging loans due to be repaid in the next month. I hold units in these, but at the time of writing there are also units on the aftermarket (that are changing hands). From what I can tell by looking at the loan pages, the following would happen on early or late redemption. The late situation is in the event of delayed refinance as opposed to difficulty to repay: An****** Bridging Loan: Early: Minimum 4 month term now exceeded and so interest would only be payable to the redemption date. Late: Not known S**** M********* Bridging Loan: Early: Not clear. Q&A response states the loan agreement will show the minimum term, but does not state what is in the loan agreement. Full interest has been retained, suggesting this might be payable in full on early redemption. Late: Explicit rate increase from 1.25%pm to 1.75% pm B***** Bridging Loan: Early: Full interest payable even if redeemed early. Late: Not known. We often or perhaps never get to see the full contract (small print and all that...) The little bit I've come across when a bridge defaults in this way; is that there is a 'default interest rate' or penalty to help concentrate the mind of the borrower which is about 50% higher than their standard rate ie from 1% to 1.5%. This is kind of standard, but there haven't been any defaults really to speak. (Apart from 48, which is a different story) The contracts are taylored to suit the borrowers needs. They will ask and want certain things, so where we give them something like the benefit of repaying early then some other possible benefit might be lost, as each benefit has a cost to it. I'm very tired my self so I don't know if I really know if this answers what your talking about.
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