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Post by carol167 on Feb 3, 2020 13:34:23 GMT
Can anyone please explain why is there a 5.8% sell out fee now on top of the 0.5% fees  All my loans were taken out when the interest on offer was higher than 5.4 going forward.
It amounts to nearly a years worth of interest and effectively a 3rd of all my interest from all the 5 years of investing with them. I don't understand.
Who on earth would sign up to anything with those kind of exit fees ??
It isn't what it said on the tin. I've gone from anger now to just sadness at how badly LW have treated loyal investors.
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IFISAcava
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Post by IFISAcava on Feb 3, 2020 13:45:36 GMT
Can anyone please explain why is there a 5.8% sell out fee now on top of the 0.5% fees All my loans were taken out when the interest on offer was higher than 5.4 going forward.
It amounts to nearly a years worth of interest and effectively a 3rd of all my interest from all the 5 years of investing with them. I don't understand.
Who on earth would sign up to anything with those kind of exit fees ??
It isn't what it said on the tin. I've gone from anger now to just sadness at how badly LW have treated loyal investors.
so the sell out fee is now higher than the interest new investors will receive! that can only mean that either 1) your existing loans are receiving negative interest or 2) it's an artefact of how percentages are calculated (e.g. a 50% fall needs a 100% rise to recover all the lost ground - so a 5.4% shortfall (assuming zero current interest) needs a 5.8% uplift - kind of works on a calculator barring some rounding) or c) there is some sort of adjustment for Shield contributions/bad loans within the sell out fee, which is covered in the small print somewhere if you have the inclination to search.
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IFISAcava
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Post by IFISAcava on Feb 3, 2020 13:49:09 GMT
what's quite annoying is that there is no way of knowing what you are actually getting at the moment without requesting a sell out and seeing what the shortfall is or waiting until the end of the month and calculating retrospectively.
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Post by carol167 on Feb 3, 2020 14:01:06 GMT
what's quite annoying is that there is no way of knowing what you are actually getting at the moment without requesting a sell out and seeing what the shortfall is or waiting until the end of the month and calculating retrospectively.
I keep detailed spreadsheets since LW never used to have an overall % that told you what your account was earning - then they did for a while - then they took it away.
My records tell me that for December I got 5.75% on the classic and 5.67% on the ISA.
First we're told - the rate's reducing going forward. Then we realise that EXISTING loan rates for loans we had already invested in were dropping down gong forward. Then it dawns on us that they're ACTUALLY back dating the loan drop to take away money that we've already earned if we dare to try and leave.
I'm getting all angry again now.  .
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benaj
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Post by benaj on Feb 3, 2020 14:03:30 GMT
The 5.8% is only average interest shortfall. The shortfall for selling individual loan chunks varies. The lowest I have seen is 0.8%. The LW selling tool sells the loan with the lowest Interest shortfall first in your loan book. Ace reported a higher interest shortfall for his remaining investment, something like 6.5% interest shortfall penalty |
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IFISAcava
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Post by IFISAcava on Feb 3, 2020 14:18:18 GMT
Just downloaded my loan book.
Half my committed capital loan chunks have 1-4 year terms left (and of that over 90% is 2 years+). The other half has 4-5 year terms left. That's a long old wait to draw down.
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Post by carol167 on Feb 3, 2020 16:29:10 GMT
The 5.8% is only average interest shortfall. The shortfall for selling individual loan chunks varies. The lowest I have seen is 0.8%. The LW selling tool sells the loan with the lowest Interest shortfall first in your loan book. Ace reported a higher interest shortfall for his remaining investment, something like 6.5% interest shortfall penalty 5.8 is what I've been quoted for the ISA sell out. (which works out to more than half my entire interest for all the 3 years I've had an ISA with them).
6% is what I've been quoted for the classic sell out.
PLUS the 0.5% fee's of course.
Way to go LW. Completely hack off your entire investor base in one fell swoop. Congratulations.
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ashtondav
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Post by ashtondav on Feb 3, 2020 18:52:43 GMT
And no response from LW towers - either on this forum or on their blog, where there is an imbecilic blog saying (basically) "all is well, as planned and expected".
It my be worth taking the 6% hit and moving to a better platform. It seems to me LW have no idea how their loans may perform, which is a pretty basic underwriting skill for any lending organisation.
Basically we were sucked in by an unrealsitic 6.5% projection. I guess we should have known better when no other (black box consumer/SME) p2p outfit were estimating anywhere near.
They didn't have a clue. And it looks like they've conned their customers - but still don't have a clue. Even Northern Rock had an inkling of the stuff that hit the fan.
I sniff the scent of an email to the Daily Wail...
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squid
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Post by squid on Feb 4, 2020 8:45:03 GMT
The total fee to withdraw from my account is 7.47%. Well in excess of one year's interest. Thank you Matthew |
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Post by carol167 on Feb 4, 2020 8:59:44 GMT
The total fee to withdraw from my account is 7.47%. Well in excess of one year's interest. Thank you Matthew And there was me thinking 5.8% was bad. Good grief!!
Where did their email about the changes ever say this ?
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benaj
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Post by benaj on Feb 4, 2020 9:44:44 GMT
The total fee to withdraw from my account is 7.47%. Well in excess of one year's interest. Thank you Matthew I am trying to get a picture of the cohort performance. Do you have other cohorts apart from 2018 and 2019? Interest shortfall of 6.97% is the highest reported so far. My partner's Growth portfolio consists of 2018 and 2019, and the average interest shortfall is around 5.4%, and the lowest interest shortfall for selling a loan chunk is 3.1% at the moment.
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squid
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Post by squid on Feb 4, 2020 9:47:51 GMT
I have been an investor with Lending Works for over five years.
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Post by propman on Feb 4, 2020 9:55:21 GMT
AIUI, the shortfall is the total amount that they expect the interest to fall below the amount that their current advertised rate should yield on the same repayment profile. As this will mainly be for >1 year, it cannot be directly compared to the annual rate. So a loan with 4 years left is expecting about half the interest shortfall each year below the current advertised rate. In practice, if there estimates were accurate (I agree a huge caveat) then you would be better off staying if the headline rate is sufficient (as in fact some will repay either from borrower or Shield during the term reducing the actual shortfall). SO the issue is, is the risk of this investment (primarily that their estimate of the contributions required is too low) too high for the rate offered?
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ashtondav
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Post by ashtondav on Feb 4, 2020 10:11:29 GMT
I guess we can only assume this year’s more conservative estimates are “more” accurate than last years. Whether they are accurate in “absolute” terms is anyone’s guess.
i have decided the draconian charges to sell up are too high (given alternative platform returns) and will risk this year, and ONLY this year in LW.
I believe they took the right decision but it’s execution and communication has been both incompetent and misleading - possibly because they themselves did not understand the implications for their lenders.
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Post by befuddled on Feb 4, 2020 10:23:23 GMT
The total fee to withdraw from my account is 7.47%. Well in excess of one year's interest. Thank you Matthew yeah, there is this new concept called "retrospectively back dating interest rate cuts" - not many companies use it - and as far as I am aware, non have survived long afterwards. It might feel like they are dipping into your capital - but the way LW spin it they are not - they are just reducing your average interest rate. Credit card companies tried it (or something similar from the borrower pov), but the practice was deemed unfair and was shut down www.investopedia.com/terms/r/retroactive-interest-rate-increase.asp
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