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Post by uksoul on Jun 10, 2022 16:58:26 GMT
Any thoughts on the new loan ? the highest rate I've seen on this platform @ 8.51%
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iRobot
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Post by iRobot on Jun 10, 2022 17:47:30 GMT
Any thoughts on the new loan ? the highest rate I've seen on this platform @ 8.51% Initial thinking: 's econd charge, small loan (where recovery costs have a disproportionate effect on returned %) = not even for 18.51%'Additionally, unless I've missed it, there's nothing indicating the repayment priority. Would obviously only matter in the event of a default, but does the senior lenders capital and interest take priority over the junior lenders capital? Given how long recoveries can take, potentially that's a lot of default interest that could be accruing ahead of this loan's capital.
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Post by uksoul on Jun 10, 2022 17:55:38 GMT
Any thoughts on the new loan ? the highest rate I've seen on this platform @ 8.51% Initial thinking: 's econd charge, small loan (where recovery costs have a disproportionate effect on returned %) = not even for 18.51%'Additionally, unless I've missed it, there's nothing indicating the repayment priority. Would obviously only matter in the event of a default, but does the senior lenders capital and interest take priority over the junior lenders capital / interest? Given how long recoveries can take, potentially that's a lot of default interest that could be accruing ahead of this loan's capital. Yeah, no indication of priority usually this loan repayment would be secondary to the main one. The property is being bought and will be refinanced with interest already retained for the term which provides some comfort.
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dave4
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Cynical is a hobby not a lifestyle
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Post by dave4 on Jun 10, 2022 18:45:30 GMT
Is it me??? or is 2nd charge or mezzanine loans the new big thing in the p2p world?? every platform seems to be trying it??Are they all trying to compensate for something (a small 1st charge return).
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Post by Ace on Jun 10, 2022 19:04:20 GMT
Doesn't compare too favourably against CPCaital's 2nd charge (mezzanine) loan at 16.5%.
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dave4
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Post by dave4 on Jun 10, 2022 20:15:40 GMT
Doesn't compare too favorably against CPCaital's 2nd charge (mezzanine) loan at 16.5%. Just going on loan info / returns/ risk. I thought that.But its harder to compare if you add in platform risk. Throw in landlordinvest and Shojin to the 2nd charge compare pot and it (to me) appears under rewarded??? (between 9.5/12% would be my best guess return window)??. That said i may take a slice of first and a small slither (approximately 2 x my expected return on the 1st charge) going to have a sleep on it.
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Post by df on Jun 10, 2022 21:27:50 GMT
Any thoughts on the new loan ? the highest rate I've seen on this platform @ 8.51% I don't understand why they didn't do them as tiers. Why "mezzanine"? I've invested in 1st charge only. I prefer lower risk, an extra 1.71% on a single loan is not worth it.
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Post by uksoul on Jun 11, 2022 0:24:30 GMT
Any thoughts on the new loan ? the highest rate I've seen on this platform @ 8.51% I don't understand why they didn't do them as tiers. Why "mezzanine"? I've invested in 1st charge only. I prefer lower risk, an extra 1.71% on a single loan is not worth it. The CEO has said they are going to introduce new products in June so i assume this is the beginning of this type of loan being offered. Mezzanine loans often used to expand a business and increase the level of finance available for development. It is only 2nd charge though. So it seems Kuflink will offer more money than the usual 70% LTV via Mezzanine loans. This loan total LTV is 80%.
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rocky1
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Post by rocky1 on Jun 11, 2022 6:35:53 GMT
all the above is well and good for platforms regarding upfront fees/monitoring fees/etc.lenders should know by now that all the risks are being taken by them and in the event of any loan eventually being defaulted after a few extensions will just start the legals/receiver/and the rest all paid for by lenders.platforms can give all the marketing spiel they like because all the risks are taken on by unsecured creditors ie the lenders.p2p platforms main concern is growth and they are taking higher risk loans to continue that aim.with lenders own money retained to service interest for the term it will be 2/3 years before problems start to surface.so the loans will keep churning out on the no losses,100% record for quite a while to come.
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Post by overthehill on Jun 11, 2022 9:25:55 GMT
If you have 50 x 1k loans each year where the 2nd charge is returning an extra 2% = £1000. That's 1 bad loan total capital loss. Are you confident that you or the platform will only have 1 bad loan per year. I'd say an extra 4% for 2nd charges is getting closer to parity. The LTV levels for 1st,2nd, mezzanine can mean the difference between some return and no return. And charges across different development lenders is a deal breaker for me.
If I was investing, it would be on 2nd/3rd charges with non-development loans, like Proplend or Landlordinvest where the valuation is against something which actually exists, often income producing, paying interest every month so LTV is not increasing and has a proven valuation like a previous sale. Past returns on these types of loans with both PL and LLI have been stellar.
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rscal
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Post by rscal on Jun 11, 2022 13:15:08 GMT
Is it relevant that the same platform Kuflink will hold both tranches of debt here? And how does this 'mezzanine' tranche differ from those already available in other deals aside from the higher than usual LTV?
One option is to buy several lots (e.g. £100 each) and hold them for ... 9 months and offer them individually on the secondary market. The return is then only reduced by c. .38%pa (c.7.8% paid monthly) assuming the purchasers are happy with that deal and it proves liquid
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Post by uksoul on Jun 11, 2022 13:24:58 GMT
Is it relevant that the same platform Kuflink will hold both tranches of debt here? And how does this 'mezzanine' tranche differ from those already available in other deals aside from the higher than usual LTV?
One option is to buy several lots (e.g. £100 each) and hold them for ... 9 months and offer them individually on the secondary market. The return is then only reduced by c. .38%pa (c.7.8% paid monthly) assuming the purchasers are happy with that deal and it proves liquid
Kuflink investing in the loan means they are motivated to ensure the loan repays as it should, they are also last to be repaid in the case of default. To the investor the loan is not really different to other 2nd tranche loans. Investing for a limited period then offloading on the secondary market is a sound idea.
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Post by df on Jun 11, 2022 19:54:09 GMT
Is it relevant that the same platform Kuflink will hold both tranches of debt here? And how does this 'mezzanine' tranche differ from those already available in other deals aside from the higher than usual LTV?
One option is to buy several lots (e.g. £100 each) and hold them for ... 9 months and offer them individually on the secondary market. The return is then only reduced by c. .38%pa (c.7.8% paid monthly) assuming the purchasers are happy with that deal and it proves liquid
I sell every single loan 2 months before the due date and it's been successful (always sold on the same day KUF makes them available on SM). But now I have two that I can't sell - one is "pending status update" since April and the other is not appearing on the "sell" list. I'll have to go all the way to the end with the second one because tomorrow it will hit "last month of any loan term" restriction.
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dave4
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Post by dave4 on Jun 15, 2022 16:22:02 GMT
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iRobot
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Post by iRobot on Jun 15, 2022 18:14:13 GMT
Additionally, unless I've missed it, there's nothing indicating the repayment priority. Would obviously only matter in the event of a default, but does the senior lenders capital and interest take priority over the junior lenders capital? What is a Mezzanine Loan<snip> Order of PriorityOrder of Priority, when capital and interest are repaid. Whilst the whole loan is secured by way of a 1st or 2nd legal Charge over the security property, the charges are ordered by priority. Lenders who have lent funds in 1st charge will be paid first on any capital and interest repayment, then 2nd charge, then 3rd charge, and then 4th charge. When Lending Mezzanine Loans, you and all lenders in all the Mezzanine Loans of the security charge are accepting the order of priority when you invest.
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