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Post by Richard Martin on Jan 26, 2014 10:34:48 GMT
There's an interesting loan being offered on Thincats which is linked to the Retail Price Index and therefore protects the lender against inflation. Innovative and worth a closer look?
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Post by mrclondon on Jan 26, 2014 11:28:06 GMT
Innovative yes, but for me there are three downsides - the ten year term, the potential for mis-interepreting the tax treatment of the capital revaluation, and a lack of confidence in the TC platform to provide adequate data for HMRC reporting.
For small lenders who don't use an accountant for their personal tax reporting, its probably not worth the hassle.
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agent69
Member of DD Central
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Post by agent69 on Jan 26, 2014 12:07:27 GMT
There's an interesting loan being offered on Thincats which is linked to the Retail Price Index and therefore protects the lender against inflation. Innovative and worth a closer look? Nice to see a TC sponsor making a contribution. I had a look at this one when it first appeared. Having read it twice still not 100% certain how the index linking works. Think I will sit this one out.
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Post by Richard Martin on Jan 26, 2014 12:39:15 GMT
The indexing is very straightforward. The interest rate remains constant through the loan term but at the end of each year the outstanding loan balance is adjusted by applying the difference between the RPI the beginning of the year and the RPI at the year end and so forth throughout the term Effectively this means that lenders income is protected against inflation.
Dealing with an earlier point about the length of this loan, lenders have the option of selling at anytime on the TC secondary market.
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Post by mrclondon on Jan 26, 2014 12:56:33 GMT
Dealing with an earlier point about the length of this loan, lenders have the option of selling at anytime on the TC secondary market. But when a £1000 loan unit has amortised down to say £400, the £25 fee to use the secondary market [assuming there is a willing buyer and TC is still operational in its current form at the time] is 6.25%. Perhaps by then the fee will have increased to £50 ... or 12.5% of the outstanding capital.
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pikestaff
Member of DD Central
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Post by pikestaff on Jan 27, 2014 11:13:16 GMT
I like index linked and will be investing. The term does not bother me. If anything it's a positive. This is just the kind of investment I want in my retirement pot. The SPV structure and FIT regime give a lot of protection, and the loan is amortising after the first year. Toward the end, I expect the value of the property to greatly exceed the loan. For anyone worried about the future of the sector, see this post from Abundance: p2pindependentforum.com/thread/298/german-wind-power-company-bust?page=1&scrollTo=4126 |
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