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Post by savingstream on Jan 10, 2015 18:21:10 GMT
Hi mikes1531, your previous post is based on your above assumption which is not accurate. Borrowers are tied into a minimum term for a loan. As previously stated the interest for this term is deducted from the advance and held on account (to pay investors). If a borrower sold a property or arranged a re-finance early and wanted to repay the loan before the full term, they of course would be permitted to do so, however Lendy Ltd would not have to refund the interest. This is why we are able to offer the option to investors of paying them the minimum loan terms upfront interest upon drawdown of the loan.
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mikes1531
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Post by mikes1531 on Jan 10, 2015 22:20:17 GMT
Hi mikes1531, your previous post is based on your above assumption which is not accurate. Borrowers are tied into a minimum term for a loan. As previously stated the interest for this term is deducted from the advance and held on account (to pay investors). If a borrower sold a property or arranged a re-finance early and wanted to repay the loan before the full term, they of course would be permitted to do so, however Lendy Ltd would not have to refund the interest. This is why we are able to offer the option to investors of paying them the minimum loan terms upfront interest upon drawdown of the loan. : Sorry, but I'm still not getting my message through. I thought I made it clear that I understood that the borrower was obligated to pay the interest due for the minimum term even if they repaid the capital early, and that any lender who had opted for upfront interest would be entitled to keep the interest they'd been paid that covered the minimum term, even if their capital had been returned to them before the minimum term had lapsed. My uncertainty relates to lenders who opt for monthly interest. Perhaps my continuing failure to understand the situation is based on an erroneous assumption that if the borrower repaid before the minimum term was completed then the lenders would receive their capital back as soon as the borrower repaid. If, instead, the repayment money would be placed back in the Lendy/SS client account and stay there for the remainder of the minimum term, so that the lenders holding the parts would be continuing to accrue interest -- and that would be covered by the interest retained at drawdown -- as if the loan had run until the minimum term was up, then my questions would go away. Is that what would happen? If the lenders wouldn't receive their capital back until the minimum term was complete, then there is no issue at all. But if the lenders would receive their capital back as soon as the borrower repays, then my original question of who receives the interest the borrower has paid in advance for the period between the repayment date and the end of the minimum term still applies, and remains unanswered. If that is the case, then I'd appreciate it if SS would refer back to my previous message, starting with the paragraph that begins "My uncertainty..." and try again to answer the questions I have raised.
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Post by savingstream on Jan 11, 2015 21:09:23 GMT
In the eventuality of a borrower repaying prior to the end of the minimum loan term, all investors would receive their capital back but would stop earning interest at the point at which the capital was repaid and loan marked as 'repaid'. Any surplus interest that the borrower had paid upfront would be retained by Lendy Ltd, so in this (rare) eventuality, it would be more beneficial for an investor to have opted for the upfront interest as compared to the monthly interest which would end upon loan repayment.
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Post by mrclondon on Jan 11, 2015 21:50:19 GMT
In the eventuality of a borrower repaying prior to the end of the minimum loan term, all investors would receive their capital back but would stop earning interest at the point at which the capital was repaid and loan marked as 'repaid'. Any surplus interest that the borrower had paid upfront would be retained by Lendy Ltd, so in this (rare) eventuality, it would be more beneficial for an investor to have opted for the upfront interest as compared to the monthly interest which would end upon loan repayment. Given the slightly unusual approach adopted here it's probably one to add to your list of revisions needed to the T&C's ??
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mikes1531
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Post by mikes1531 on Jan 12, 2015 2:27:44 GMT
In the eventuality of a borrower repaying prior to the end of the minimum loan term, all investors would receive their capital back but would stop earning interest at the point at which the capital was repaid and loan marked as 'repaid'. Any surplus interest that the borrower had paid upfront would be retained by Lendy Ltd, so in this (rare) eventuality, it would be more beneficial for an investor to have opted for the upfront interest as compared to the monthly interest which would end upon loan repayment. : Thank you. That's exactly the situation I was trying to have clarified. It is now very clear. Please accept my apologies for my failure to ask the question right the first time. It will be interesting to see how PBL018 works out, and whether the borrower actually does manage to refinance and repay the loan as quickly as they were thinking they could. If they do, investors who opted for upfront interest will do very well on this loan. My personal guess is that the refinancing will take longer than expected, but that's based on no real info at all.
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