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Post by brightspark on Jul 6, 2018 15:52:38 GMT
My view for what it is worth is that any new loan should rank behind the first loan and at a higher interest rate.
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Post by danielbird193 on Jul 9, 2018 7:56:39 GMT
Having a look at the table at para. 6.2 of the new Credit Report, most of the plots have sold at or above valuation (although plot 2 significantly below). If all of those sales are completed before drawdown of the new facility, which is a condition precedent, then I see this extra borrowing as fairly low risk, so I don't see the need to apply a higher rate of interest.
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Post by brightspark on Jul 9, 2018 10:21:28 GMT
Lending and borrowing is all about risk. The borrowers assessed how much to borrow and on what terms. Things did not pan out for them. They need more money to keep their investment on track. We as lenders can supply a further loan and it is up to the borrowers whether they accepts the terms of the new loan. We can be assured that if they can borrow money cheaper elsewhere then they will. Provided AC's demand is reasonable that is unlikely as lenders usually charge a premium for coming late to a flagging project. As an aside if the boot was on the other foot you can be sure lenders would get screwed for every penny and then some.
So to conclude my argument I see no reason why lenders should not charge a modest premium for a top up loan which to justify its higher rate can stand behind the first charge loan in terms of repayment.
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ceejay
Posts: 975 
Likes: 1,149
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Post by ceejay on Jul 9, 2018 11:21:16 GMT
Having a look at the table at para. 6.2 of the new Credit Report, most of the plots have sold at or above valuation (although plot 2 significantly below). If all of those sales are completed before drawdown of the new facility, which is a condition precedent, then I see this extra borrowing as fairly low risk, so I don't see the need to apply a higher rate of interest. Yes, I noted that and came to a similar conclusion.
I tend to try to take a collaborative rather than a confrontational approach to this sort of question. I think I'm more likely to get my money back, with interest, if the borrower is successful.
That doesn't mean I won't call for strong action, including legals, when required to protect my position, but most of the time we all get a better result by co-operating.
I think there might be a lesson for life, there, not just in P2P...
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Post by westcountryfunder on Jul 9, 2018 15:33:04 GMT
So to conclude my argument I see no reason why lenders should not charge a modest premium for a top up loan which to justify its higher rate can stand behind the first charge loan in terms of repayment. I'm not a person inclined to kick a man when he's down, but I find I agree with you on this. The new borrowing requested amounts to an extra 11.6% of the original loan. The LGDV will now rise to 77.7%. I think it not remotely unreasonable to seek a higher interest rate in the circumstances, and the additional loan should come after the first in priority. It's only the higher interest rate which affects the borrower, but the original lenders will have their security diluted. Then, of course, there's always the possibility that not all sales will complete (or is it different in Scotland?).
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