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Post by valueinvestor123 on Jan 4, 2015 11:27:53 GMT
The advertised rate for FS is 13% and it seems a little high compared to the rest p2p platforms. Is this a gross or net rate and is it likely to be achieved or should there be a * next to the 13% with explanation.
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bugs4me
Member of DD Central
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Post by bugs4me on Jan 4, 2015 12:43:58 GMT
The advertised rate for FS is 13% and it seems a little high compared to the rest p2p platforms. Is this a gross or net rate and is it likely to be achieved or should there be a * next to the 13% with explanation. The 13% (although there are a couple being offered at 12%), is the best case scenario where the borrower repays the loan in full plus all charges/interest at redemption time. In the event of a default, then basically you are in the hands as to how much the asset will realise at auction or maybe a private sale. FS advertise that there have been zero capital losses but there has been at least one where the interest returned was zero. There may of course be more than one but it's only loans that you are actively involved in where the information is supplied. FS actually state - Average net interest rate earned by Savers* 12.8% *Calculated based on completed loans and stated before tax
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Post by valueinvestor123 on Jan 4, 2015 13:24:10 GMT
Thanks for the explanation. I can't quite figure out why somebody would like to borrow at 12%+ secured on property when a mortgage could be available at 2.5%+.
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mikes1531
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Post by mikes1531 on Jan 4, 2015 17:19:50 GMT
I can't quite figure out why somebody would like to borrow at 12%+ secured on property when a mortgage could be available at 2.5%+. If you need to borrow for only a short period it can be cheaper to pay a higher interest rate than to pay the valuation and set-up fees for a 'conventional' mortgage, especially if the mortgage cannot be repaid early without incurring substantial fees for doing that.
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