tlgo
New Member
Posts: 2 
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Post by tlgo on Sept 20, 2017 17:49:13 GMT
Hey,
I am new to P2P lending and have a question.
On the MT site there are 10 drawdowns available for investment within the Manchester development. What is the difference between each drawdown? What are the benefits (if any) of say investing in the 2nd drawdown, over the 10th drawdown?
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robski
Member of DD Central
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Post by robski on Sept 20, 2017 18:36:27 GMT
Hey, I am new to P2P lending and have a question. On the MT site there are 10 drawdowns available for investment within the Manchester development. What is the difference between each drawdown? What are the benefits (if any) of say investing in the 2nd drawdown, over the 10th drawdown? In this case none, they are all the same loan and rank the same, they were just drawn down as works progressed
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tlgo
New Member
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Post by tlgo on Sept 20, 2017 18:44:41 GMT
Thanks! I thought that would be the case.
In regards to other cases, would their be a benefit from joining a different drawdown?
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ptr120
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Post by ptr120 on Sept 20, 2017 19:13:14 GMT
Thanks! I thought that would be the case. In regards to other cases, would their be a benefit from joining a different drawdown? The devil is in the detail and sometimes depends on the platform. Sometimes an earlier tranche might have a lower interest rate but a higher priority (in the event of a default). Sometimes an earlier tranche may hold interest to pay on a monthly basis, whereas, for later tranches, the borrower may be required to service the debt on a monthly basis. If a multi-tranche loan is partially amortising, an earlier tranche may have more time to amortise. Sometimes investing in a later tranche can be seen as a good thing. As an early investor, loan completion and repayment might be somewhat uncertain - However, a later tranche might be presented with the same security but by that point some parts of a development have been 'sold', making repayment more of a sure thing.
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archie
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Post by archie on Sept 21, 2017 6:18:56 GMT
On MT, as tranches remain split, there can be an advantage to holding several tranches. When selling you can pick the shortest queue, no guarantee a buyer might not want a different tranche though.
Generally, if the interest rate and end date are the same the tranches rank equally. Earlier tranches may have interest retained.
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