r00lish67
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Post by r00lish67 on Nov 3, 2018 20:16:28 GMT
I'm not sure if early exit fee on RS is fixed. Is it? For me the main advantage of LW is very simple hands free investment. On RS, to achieve the same 6-6.5% requires quite a bit of work. It is easy now to get 6%+, but you never know for how long. I've been with RS for over 2 years and in my observation the rates are very sporadic. Generally (imo) LW is much more user friendly. I think now that LW rate goes up I will be reinvesting my RS returns here. I believe that the early exit fee on the 5 year market is 1.5% on RS, compared with 0.6% on LW. ..but as Matthew pointed out above, LW will also charge you the rate differential to compensate incoming investors. I did a little test on my account and the total ER figure was a shade over 2% in total, but that will vary greatly depending on the rate of your contracts. Of course, for new funds that only matters if the rate increases beyond 6.5% - surely it couldn't, could it? 
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Post by Ace on Nov 3, 2018 20:51:43 GMT
I believe that the early exit fee on the 5 year market is 1.5% on RS, compared with 0.6% on LW. ..but as Matthew pointed out above, LW will also charge you the rate differential to compensate incoming investors. I did a little test on my account and the total ER figure was a shade over 2% in total, but that will vary greatly depending on the rate of your contracts. Of course, for new funds that only matters if the rate increases beyond 6.5% - surely it couldn't, could it? Fair point. I'm guessing that it works something like this: If I want to sell my 6% 5 year loan after 1 month, and the current 5 year rate is 6.5%; it will cost me 59 months at 0.5% plus the 0.6% fee. So, roughly 3.1%. A fairly steep fee, but this is a fairly extreme example. It's acceptable to me as I'm not intending to exit my LW loans early, and wouldn't mind paying the fee in an emergency.
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benaj
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Post by benaj on Nov 3, 2018 21:54:57 GMT
..but as Matthew pointed out above, LW will also charge you the rate differential to compensate incoming investors. I did a little test on my account and the total ER figure was a shade over 2% in total, but that will vary greatly depending on the rate of your contracts. Of course, for new funds that only matters if the rate increases beyond 6.5% - surely it couldn't, could it? Fair point. I'm guessing that it works something like this: If I want to sell my 6% 5 year loan after 1 month, and the current 5 year rate is 6.5%; it will cost me 59 months at 0.5% plus the 0.6% fee. So, roughly 3.1%. A fairly steep fee, but this is a fairly extreme example. It's acceptable to me as I'm not intending to exit my LW loans early, and wouldn't mind paying the fee in an emergency. so what happen if lending works decrease the new rate? does the seller get compensated for selling a hight rate loan to the other lender?
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Post by Ace on Nov 3, 2018 22:03:28 GMT
Fair point. I'm guessing that it works something like this: If I want to sell my 6% 5 year loan after 1 month, and the current 5 year rate is 6.5%; it will cost me 59 months at 0.5% plus the 0.6% fee. So, roughly 3.1%. A fairly steep fee, but this is a fairly extreme example. It's acceptable to me as I'm not intending to exit my LW loans early, and wouldn't mind paying the fee in an emergency. so what happen if lending works decrease the new rate? does the seller get compensated for selling a hight rate loan to the other lender? Hmm... Good question. Don't know the answer, but doubt it will go to the lender. I'd like to think it would end up in the PF. Matthew?
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r00lish67
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Post by r00lish67 on Nov 3, 2018 22:20:47 GMT
..but as Matthew pointed out above, LW will also charge you the rate differential to compensate incoming investors. I did a little test on my account and the total ER figure was a shade over 2% in total, but that will vary greatly depending on the rate of your contracts. Of course, for new funds that only matters if the rate increases beyond 6.5% - surely it couldn't, could it? Fair point. I'm guessing that it works something like this: If I want to sell my 6% 5 year loan after 1 month, and the current 5 year rate is 6.5%; it will cost me 59 months at 0.5% plus the 0.6% fee. So, roughly 3.1%. A fairly steep fee, but this is a fairly extreme example. It's acceptable to me as I'm not intending to exit my LW loans early, and wouldn't mind paying the fee in an emergency. Me too. Will probably add a bit to my LW investment. Relevant bit btw in their FAQ's: "If you're only selling part of your overall loan portfolio, we'll try to minimise any interest rate shortfall charges wherever possible by selecting loan chunks with interest rates which are closest to the current Lending Works rates when processing your Quick Withdraw request. We'll also prioritise loan chunks with shorter maturity dates to minimise the length of time for which any shortfall might be payable."
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Post by Matthew on Nov 5, 2018 11:13:45 GMT
so what happen if lending works decrease the new rate? does the seller get compensated for selling a hight rate loan to the other lender? Hmm... Good question. Don't know the answer, but doubt it will go to the lender. I'd like to think it would end up in the PF. Matthew ? Currently, the benefit goes to the incoming lender(s). The reason is that the lender rate on each loan is applied to all participating lenders. Ideally, you'd allow each individual chunk to have its own rate, which would mean you could remove the interest rate penalty altogether. However, when we looked into implementing this, it would have complicated/slowed down the repayment allocation process significantly and we felt it was not a worthwhile exercise at that time, though we may revisit. It's a nice little bonus for the new lender I suppose, but it would be a bit harsh to charge them a penalty for taking on the loan when they didn't specifically choose to participate in that loan. Since there's no way you can game the system to pick up these loans, it should generally work out fairly. Hope this helps.
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easylender
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Post by easylender on Nov 6, 2018 0:47:02 GMT
Hmm... Good question. Don't know the answer, but doubt it will go to the lender. I'd like to think it would end up in the PF. Matthew ? Currently, the benefit goes to the incoming lender(s). The reason is that the lender rate on each loan is applied to all participating lenders. Ideally, you'd allow each individual chunk to have its own rate, which would mean you could remove the interest rate penalty altogether. However, when we looked into implementing this, it would have complicated/slowed down the repayment allocation process significantly and we felt it was not a worthwhile exercise at that time, though we may revisit. It's a nice little bonus for the new lender I suppose, but it would be a bit harsh to charge them a penalty for taking on the loan when they didn't specifically choose to participate in that loan. Since there's no way you can game the system to pick up these loans, it should generally work out fairly. Hope this helps. The above doesn't seem right to me. If a selling lender has to pay a penalty when the rates go up, surely they should get a bonus when the rates go down.
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Post by Matthew on Nov 6, 2018 11:08:58 GMT
Currently, the benefit goes to the incoming lender(s). The reason is that the lender rate on each loan is applied to all participating lenders. Ideally, you'd allow each individual chunk to have its own rate, which would mean you could remove the interest rate penalty altogether. However, when we looked into implementing this, it would have complicated/slowed down the repayment allocation process significantly and we felt it was not a worthwhile exercise at that time, though we may revisit. It's a nice little bonus for the new lender I suppose, but it would be a bit harsh to charge them a penalty for taking on the loan when they didn't specifically choose to participate in that loan. Since there's no way you can game the system to pick up these loans, it should generally work out fairly. Hope this helps. The above doesn't seem right to me. If a selling lender has to pay a penalty when the rates go up, surely they should get a bonus when the rates go down. Sure - although that 'bonus' could only come from the incoming lender (who is scheduled to receive higher than expected interest repayments). I think most people wouldn't be too happy about paying some form of penalty upfront when they had no choice about whether or not to take on this loan. Currently, loans are always traded at par, but there could be an argument for trading at a discount/premium depending on their interest rate (compared to market rates), repayment status etc, but this needs to be carefully considered to account for all scenarios.
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Post by wiseclerk on Nov 6, 2018 14:42:36 GMT
Have updated the new rates in the comparison
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benaj
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Post by benaj on Nov 6, 2018 18:52:03 GMT
Current lending queue for new money (2018-11-06):
£657,068.76 - 7 days
reinvestment lending queue: 103,718.52
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Post by Ace on Nov 6, 2018 22:29:42 GMT
... Currently, loans are always traded at par, but there could be an argument for trading at a discount/premium depending on their interest rate (compared to market rates), repayment status etc, but this needs to be carefully considered to account for all scenarios. Shhhhhhhh 😩, if you're going to do this, please just make a decision and tell us afterwards. Life's too short to go through another discussion on this topic like the one on MT 😉
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Post by Badly Drawn Stickman on Nov 6, 2018 22:34:15 GMT
... Currently, loans are always traded at par, but there could be an argument for trading at a discount/premium depending on their interest rate (compared to market rates), repayment status etc, but this needs to be carefully considered to account for all scenarios. Shhhhhhhh 😩, if you're going to do this, please just make a decision and tell us afterwards. Life's too short to go through another discussion on this topic like the one on MT 😉 It could just be a cut and paste job, I don't think anybody was persuaded to change their positions.
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p2pete
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Post by p2pete on Nov 8, 2018 9:23:21 GMT
The trouble is it takes 7 days to get invested, so the money I deposited for the 6.5% rate won't get invested until Monday at the earliest. But the site says the 6.5% rate is only valid until Sunday 11th.
So I could end up back at 6% anyway by the time it's invested. When do we find out what next weeks rate will be? I doesn't make much sense for rate windows to be shorter that the time it takes to actually get invested!
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Post by woodyalan on Nov 8, 2018 10:10:50 GMT
Hi p2pete. I see your point but historically rates have not jumped around and have tended to stay at that rate for some time. So very unlikely to go up one week and down the next.
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invester
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Post by invester on Nov 9, 2018 11:17:07 GMT
6.5% is for next week as well.
The 3yr rate goes up to 5%.
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