Greenwood2
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Post by Greenwood2 on May 6, 2022 17:43:35 GMT
Any development where the loan is paid in tranches based on a QS valuation of work done is relying on the lender having the funds available to continue the work. With mainstream lenders this is usually not a problem, but a p2p lender is dependent on investors continuing to want to fund it. Depending on the contractual arrangements it could be possible for a developer to be unable to complete the project and so have a claim against the lender. I'm not wholly convinced, if as a borrower I ask for £1m to develop out and thats all ticked off by valuers, QS etc. If I spend the £1m and we haven't completed, thats my problem. The lender will either have to agree to further funding or look to take control of the asset in order to return their funds. Its not the lenders fault, I've blown the money, I'd struggle to see how I could litigate against them Are you aware of any precedent for that? I believe one P2P lender had 'promised' further tranches would be funded without lenders knowing about it. Lenders can also be pressured into funding future loans because the borrower may stop paying back the earlier loans due to lack of future funding. Taking control of a partially completed development is not a good place to be, no one wants to buy it (except at a knock down price), contractors go off site and have to be re-negotiated, it's probably left partially finished for an extended period between owners and deteriorates/gets vandalised/gets squatters and who knows what else, so the new owner won't pay a lot, which means lenders don't get a lot back.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on May 6, 2022 19:17:56 GMT
Any development where the loan is paid in tranches based on a QS valuation of work done is relying on the lender having the funds available to continue the work. With mainstream lenders this is usually not a problem, but a p2p lender is dependent on investors continuing to want to fund it. Depending on the contractual arrangements it could be possible for a developer to be unable to complete the project and so have a claim against the lender. I'm not wholly convinced, if as a borrower I ask for £1m to develop out and thats all ticked off by valuers, QS etc. If I spend the £1m and we haven't completed, thats my problem. The lender will either have to agree to further funding or look to take control of the asset in order to return their funds. Its not the lenders fault, I've blown the money, I'd struggle to see how I could litigate against them Are you aware of any precedent for that? Multiple, notorious case on Lendy plus others, some on FS, one on AC, and although not property a notorious case on Unbolted. Oh and also been tried via the FOS against Somo Unfortunately if youve spent the money and havent completed then it is very much the lenders problem as they have an asset which is probably not worth the value of the loan because developments actually decrease in value during the build - the J curve
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Post by df on May 6, 2022 19:27:02 GMT
I'm not wholly convinced, if as a borrower I ask for £1m to develop out and thats all ticked off by valuers, QS etc. If I spend the £1m and we haven't completed, thats my problem. The lender will either have to agree to further funding or look to take control of the asset in order to return their funds. Its not the lenders fault, I've blown the money, I'd struggle to see how I could litigate against them Are you aware of any precedent for that? I believe one P2P lender had 'promised' further tranches would be funded without lenders knowing about it. Lenders can also be pressured into funding future loans because the borrower may stop paying back the earlier loans due to lack of future funding. Taking control of a partially completed development is not a good place to be, no one wants to buy it (except at a knock down price), contractors go off site and have to be re-negotiated, it's probably left partially finished for an extended period between owners and deteriorates/gets vandalised/gets squatters and who knows what else, so the new owner won't pay a lot, which means lenders don't get a lot back. Just wanted to add that a considerable part of proceeds is taken by third parties and in some cases there is nothing left to distribute to investors. I'm not worried about LP though, probably the least riskiest on P2P market atm.
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zuluwarrior
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chap from Newcastle, dabbling here and there. Long-time lurker of the forums
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Post by zuluwarrior on May 7, 2022 9:40:15 GMT
Completely agree that its not preferable for a lender to take receivership of a part-complete site but referring to the OP, I still don't believe LP could be forced into administration by litigation from a borrower. Unless said lender had agreed to further tranches which they had not provided, thus breach of contract.
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zlb
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Post by zlb on May 20, 2022 13:11:16 GMT
From today's email indicating interest rate rise, they say " Loanpad specifically aims to provide a lower-risk, stable and consistent investment and we believe our products are worthy of forming a part of almost any investment portfolio."
Are they allowed to say that, regarding promotion as safe to any type of investor?
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p2pfan
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Post by p2pfan on May 20, 2022 13:21:11 GMT
From today's email indicating interest rate rise, they say " Loanpad specifically aims to provide a lower-risk, stable and consistent investment and we believe our products are worthy of forming a part of almost any investment portfolio." Are they allowed to say that, regarding promotion as safe to any type of investor? Fair point. Loanpad need to increase their rates urgently, whereas the email suggests they're "thinking about it". Let's not forget both their miserly 3% and 4% rates were dropped to those levels a while back from higher amounts. These 3%/4% rates are by no means competitive in the current market, with the real rate of UK inflation due to be 13%+ soon. I've been taking funds out of Loanpad and putting them in 100% secure FSCS-protected bank accounts which don't carry the very significant risks of P2P lending (one year bank bond savings rates now only slightly lower than Loanpad, at 2.27%).
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Post by Badly Drawn Stickman on May 20, 2022 13:22:15 GMT
From today's email indicating interest rate rise, they say " Loanpad specifically aims to provide a lower-risk, stable and consistent investment and we believe our products are worthy of forming a part of almost any investment portfolio." Are they allowed to say that, regarding promotion as safe to any type of investor? Probably borderline. The aspect of Loanpad considering its rates to be aligned with protected investments has always existed. Then again it has worked well for them so far.
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jcb208
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Post by jcb208 on May 20, 2022 14:17:30 GMT
5% return would be better even though well below inflation, cant see getting any more then that
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on May 20, 2022 14:55:40 GMT
From today's email indicating interest rate rise, they say " Loanpad specifically aims to provide a lower-risk, stable and consistent investment and we believe our products are worthy of forming a part of almost any investment portfolio." Are they allowed to say that, regarding promotion as safe to any type of investor? The email is only sent to people who are eligible to receive it but as the platfrom is open to anyone who pass the appropriateness test, including those who identify as restricted investors, so 'almost any' is probably OK.
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agent69
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Post by agent69 on May 20, 2022 15:02:10 GMT
The email states "Interest Rates on some bank savings accounts are also on the rise and, with this in mind, we anticipate that our interest rates will soon also need to rise"
Is this just flowery bull to discourage people from jumping ship in the near future?
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zlb
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Post by zlb on May 20, 2022 15:04:42 GMT
From today's email indicating interest rate rise, they say " Loanpad specifically aims to provide a lower-risk, stable and consistent investment and we believe our products are worthy of forming a part of almost any investment portfolio." Are they allowed to say that, regarding promotion as safe to any type of investor? Probably borderline. The aspect of Loanpad considering its rates to be aligned with protected investments has always existed. Then again it has worked well for them so far. I'm holding out for higher FSCS products. Like you say, and having lost money in P2P, it's a high risk for 3% comparatively
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a0010402
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Post by a0010402 on May 20, 2022 17:49:04 GMT
Comparatively Secure Trust Bank today pays 1.25% on its 60-day notice account, and Moneybox 32-days notice account pays 1.4%. So the difference isn't even 3% comparatively, it's 2.6%.
Worst case scenario: If Russia deploys a TNW anywhere on Earth and there is a bank run and everyone scrambles for the exits, which account do you think will first stop paying? A P2P firm's or a bank's? And a few weeks or months down the line, when it's time for compensation, which one is going to give you your money back more readily - even if the property market in the meantime due to the war has crashed 50% and all loans are at risk - the P2P firm or the FSCS?
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agent69
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Post by agent69 on May 20, 2022 19:19:10 GMT
Comparatively Secure Trust Bank today pays 1.25% on its 60-day notice account, and Moneybox 32-days notice account pays 1.4%. So the difference isn't even 3% comparatively, it's 2.6%. Worst case scenario: If Russia deploys a TNW anywhere on Earth and there is a bank run and everyone scrambles for the exits, which account do you think will first stop paying? A P2P firm's or a bank's? And a few weeks or months down the line, when it's time for compensation, which one is going to give you your money back more readily - even if the property market in the meantime due to the war has crashed 50% and all loans are at risk - the P2P firm or the FSCS? If this happens the least of anyones worries will be how their P2P investments perform.
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ashtondav
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Post by ashtondav on May 22, 2022 17:22:48 GMT
Comparatively Secure Trust Bank today pays 1.25% on its 60-day notice account, and Moneybox 32-days notice account pays 1.4%. So the difference isn't even 3% comparatively, it's 2.6%. Worst case scenario: If Russia deploys a TNW anywhere on Earth and there is a bank run and everyone scrambles for the exits, which account do you think will first stop paying? A P2P firm's or a bank's? And a few weeks or months down the line, when it's time for compensation, which one is going to give you your money back more readily - even if the property market in the meantime due to the war has crashed 50% and all loans are at risk - the P2P firm or the FSCS? 1.4% in mb. 4% in LP. That’s over 250% higher rates in LP. for comparison 10 year gilts offer 2%. High quality corporate bonds 3%-4%. 100% higher rates for higher risk you are adequately rewarded compared to available interest rates. now were you to compare them with my NSI INDEX LINKERS, currently paying over 7% you’d have a very good point!
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a0010402
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Post by a0010402 on May 22, 2022 21:06:31 GMT
I don't think it's right using percentajes of a second order to make the comparison.
An interest rate of 0.1% vs 0.35% may be a 250% difference but only leaves you 0.25% better off.
It's not the same as a rate of 1% vs 3.5% which might be also 250% but leaves you 2.5% better off.
I was saying the 4% rate vs 1.4% leaves you only about 2.6% better off (though it's actually 2.564%). I was making a first order comparison.
Numbers like 250 (250%) or 100 (100%) belong to the second order and are just too big to fit inside a first order comparison. I couldn't possibly have been using those numbers (and I still don't).
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