bugs4me
Member of DD Central
Posts: 1,845
Likes: 1,478
|
Post by bugs4me on Apr 15, 2015 17:58:00 GMT
Whats wrong with this loan? FC get loans similar to this (but bigger) away on virtually a daily basis. Are the FC loans at 75% LTV? AC did some 6.5% BtL loans in its early days (#6, #11, and #25 are still outstanding), but they were at a much more secure 50% LTV, and IIRC they offered significant -- 3.5% -- cashback. I've set my target for this one -- at nil! The 6.5% may (just) be okay but it's hardly competitive from a lenders point of view with a 75% LTV based on a 6 month marketing period. So in the event of default, with (default) interest being accrued it should be okay. But in the event of the valuation not being achieved on the open market then in my book this would be purely a punt and I don't take punts at 6.5%. Now at 50% LTV with cashback it could be worthwhile but not for me on these terms. Looks as though AC are being squeezed by the competition and of course need to keep the deal flow going but this one IMO crosses my red line.
|
|
is
Posts: 108 
Likes: 14
|
Post by is on Apr 15, 2015 18:02:48 GMT
AC and 6.5%, thoughts I think since the cost of capital is now so low, we are being pushed not only into P2P but into the more specialist parts of P2P to earn our roughly net 10%. FC is certainly down in the 8% before management charges and defaults which is why I no longer generally invest there. Ratesetter keeps reaching 6.?%, every few weeks this will equate to 6.5% but this is only really what you get for low grade corp bonds, but with higher risk. I'M amazed how quickly the market is being driven down to silly prices but I guess it reflects the true cost of capital and the demand for any interest income. 6.5% has nothing in it for default risk which has to swallow up the 0.5% Keep an eye out for the odd 12% at FC as we had last week, but 6.5%, I don't think so. What do you think the market rate for a BTL loan is? This isn't a bridging or SME loan. Closest FC comparisons would be the the commercial mortgage loans (they didn't do BTL yet), e.g. 6391 - 7% after fees, 77% LTV much less secure than this offering with the rent assignment and conservative valuation used by AC. Also a new build 3 bed house is much more liquid collateral than commercial property, so looks OK for me.
|
|
bugs4me
Member of DD Central
Posts: 1,845
Likes: 1,478
|
Post by bugs4me on Apr 15, 2015 18:06:01 GMT
AC and 6.5%, thoughts I think since the cost of capital is now so low, we are being pushed not only into P2P but into the more specialist parts of P2P to earn our roughly net 10%. FC is certainly down in the 8% before management charges and defaults which is why I no longer generally invest there. Ratesetter keeps reaching 6.?%, every few weeks this will equate to 6.5% but this is only really what you get for low grade corp bonds, but with higher risk. I'M amazed how quickly the market is being driven down to silly prices but I guess it reflects the true cost of capital and the demand for any interest income. 6.5% has nothing in it for default risk which has to swallow up the 0.5% Keep an eye out for the odd 12% at FC as we had last week, but 6.5%, I don't think so. What do you think the market rate for a BTL loan is? This isn't a bridging or SME loan. Probably with the ideal applicant lower than 6.5% with a Bank or BS. But is this the market that AC are in - 5 year mortgages?
|
|
mikes1531
Member of DD Central
Posts: 6,453
Likes: 2,320
|
Post by mikes1531 on Apr 15, 2015 18:09:28 GMT
What do you think the market rate for a BTL loan is? This isn't a bridging or SME loan. I would guess closer to 10%, especially at 75%LTV, but that's based on nothing at all. Not knowing how big the incentives offered to the underwriters were/are, we can't judge by the fact that the underwriters stepped forward to do their job -- presuming that they have. So we'll have to wait until the loan appears on the AC availability list next week and see how quickly -- or slowly -- it is taken up by AC's investors.
|
|
is
Posts: 108
Likes: 14
|
Post by is on Apr 15, 2015 18:19:34 GMT
What do you think the market rate for a BTL loan is? This isn't a bridging or SME loan. I would guess closer to 10%, especially at 75%LTV, but that's based on nothing at all. Not knowing how big the incentives offered to the underwriters were/are, we can't judge by the fact that the underwriters stepped forward to do their job -- presuming that they have. So we'll have to wait until the loan appears on the AC availability list next week and see how quickly -- or slowly -- it is taken up by AC's investors. Virgin Money 5Y BTL fixed rate for this loan size/LTV is 3.89% with a 1.5k upfront fee (after cashback), but has a 5% ERC
|
|
|
|
Post by chris on Apr 15, 2015 18:26:03 GMT
What do you think the market rate for a BTL loan is? This isn't a bridging or SME loan. I would guess closer to 10%, especially at 75%LTV, but that's based on nothing at all. Not knowing how big the incentives offered to the underwriters were/are, we can't judge by the fact that the underwriters stepped forward to do their job -- presuming that they have. So we'll have to wait until the loan appears on the AC availability list next week and see how quickly -- or slowly -- it is taken up by AC's investors. Underwriters get the same fees across all loans, they're taken from the AC fee which is also pretty much standardised across all loans. No special promotions on BTL or any other loan types otherwise they wouldn't make the platform itself any money. If you can get a BTL from a bank then the rates are currently far lower than 6.5%, with this loan being near the top end of the market. As we work on bringing more BTL mortgages to the platform, and they are very popular with a section of our lender base, then you're likely to see rates around this level and lower rather than higher. If that's not for you then there are other types of loan available to you.
|
|
ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 11,330
Likes: 11,549
|
Post by ilmoro on Apr 15, 2015 18:41:38 GMT
As we work on bringing more BTL mortgages to the platform, and they are very popular with a section of our lender base Whats that based on out of interest? To my knowledge, guessing a bit, there have so far been 6, incl this one, out of 170 odd loans, which is pretty low percentage to guage popularity on. Nothing against them, and have invested in the couple that offered 10%+, but at this level they dont offer me anything I cant get elsewhere. I would assume that AFI offers a good opportunity for a pipeline in this area & if its a quid quo pro for their help with Ippy, go for it 
|
|
|
|
Post by chris on Apr 15, 2015 18:58:18 GMT
As we work on bringing more BTL mortgages to the platform, and they are very popular with a section of our lender base Whats that based on out of interest? To my knowledge, guessing a bit, there have so far been 6, incl this one, out of 170 odd loans, which is pretty low percentage to guage popularity on. Nothing against them, and have invested in the couple that offered 10%+, but at this level they dont offer me anything I cant get elsewhere. I would assume that AFI offers a good opportunity for a pipeline in this area & if its a quid quo pro for their help with Ippy, go for it It's based on demand on those existing loans, market research and simply talking to some of our lenders. They're generally seen as reasonable return for lower risk than other types of P2P loan and are well within the range of rates offered by some of our competitors. As we broaden our horizons not every loan or every type of loan is going to, or is intended to, appeal to every lender.
|
|
SteveT
Member of DD Central
Posts: 6,875
Likes: 7,924
|
Post by SteveT on Apr 15, 2015 19:36:16 GMT
To be fair, LandBay (whose entire offering is based on lower risk 5 year BTL mortgages) offer investors either 4.4% on a 3 year fixed basis or 3.5% index tracker linked to BBR
|
|
|
|
Post by Duane Dibley on Apr 15, 2015 20:01:19 GMT
If you can get a BTL from a bank then the rates are currently far lower than 6.5%, with this loan being near the top end of the market. If you can get a BTL from a bank at far lower rates then it begs the question why the borrower isn't, getting a BTL from a bank that is. I presume it's because of the borrower's age. The figures don't stack up to me, with a purchase price of £127,260 and an estimated rental of £775/month that gives a gross yield to the borrower of 7.3% pa, but wait he's paying 6.5% to lenders plus commission? Now maths was never my strong point but I reckon he'd be better off putting his money in a decent p2p platform. How about a nice speedboat? I wish you luck but am oot.
|
|
|
|
Post by davee39 on Apr 15, 2015 20:17:05 GMT
This compares favourably with alternative mortgage based P2P offerings, I have avoided the 12% ,or perhaps 6.4% after fees and losses(!) and maybe 5.25% (with provision fund and misleading APR) loans offered elsewhere but have been happy to set a modest target on this one. At less than £100k it will go fast. If similar loans come along they will also get a contribution - we don't all have the constitution for the bridging loan roller-coaster.
I agree with comments about Ratesetter, but they now hold a very large chunk of my investments so I need to diversify elsewhere.
|
|
jo
Member of DD Central
dead
Posts: 741
Likes: 498
|
Post by jo on Apr 15, 2015 20:39:25 GMT
If I was tempted by this, I'm trying to work out why I wouldn't just put it into GEIA instead.
|
|
am
Posts: 1,495
Likes: 601
|
Post by am on Apr 15, 2015 20:44:59 GMT
If I was tempted by this, I'm trying to work out why I wouldn't just put it into GEIA instead. Diversification across asset classes (small scale infrastructure loans versus buy-to-let) and loans.
|
|
ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 11,330
Likes: 11,549
|
Post by ilmoro on Apr 15, 2015 20:58:55 GMT
If I was tempted by this, I'm trying to work out why I wouldn't just put it into GEIA instead. A desire not to invest in visually unappealing, environmentally unfriendly, power bill inflating, exploding, flying pig mincers  
|
|
mikes1531
Member of DD Central
Posts: 6,453
Likes: 2,320
|
Post by mikes1531 on Apr 15, 2015 21:01:40 GMT
As we broaden our horizons not every loan or every type of loan is going to, or is intended to, appeal to every lender. I have no problem with that. In fact, as a soon-to-become shareholder I'm all in favour of a diversified offering to appeal to as many investors as possible. If similar loans come along they will also get a contribution - we don't all have the constitution for the bridging loan roller-coaster. I accept we all have different investment goals, so if this appeals to you, then I'm more than happy for you to invest in it. At less than £100k it will go fast. This is the part I'm least convinced about. If it does go quickly then my concerns are unfounded, which would be most encouraging. So I'll be watching this one closely next week.
|
|
