Investboy
Member of DD Central
Trying to recover from P2P revolution
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Post by Investboy on Oct 28, 2015 11:41:16 GMT
Disclaimer: I'm not complaining about SS 12% yield. I'm also not highly familiar with debt/loan markets.The page ( www.money.co.uk/bridging-loans.htm) quoted in another post gives you ranges of interest for bridging loans, starting around 0.7%/month level (8.4%), so who gets the lower one? Why secured loans are more expensive than unsecured (comparing SS vs RS/FC)? Why the borrowers from SS don't go to FC, Zopa, RS or others where they can get 8-9% instead of 18%. I just can't get my head around this following simple math (being software engineer). Is it the approval speed, loan amount, legal barriers? Can someone please shed some light?
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Post by mrclondon on Oct 28, 2015 12:22:04 GMT
I think the four main variables are LTV, commercial vs residential, resale demand in present condition, and most importantly other income to fund interest repayments.
The lowest quoted rates will typically only be available for a maximum of 25% LTV against a residential property inside the M25 in perfect condition expected to go to sealed bids if brought to the open market by someone on a high multiple of UK average earnings with a guarnateed payment on redundacy of greater than the debt.
OK, I've possibly gilded the lily slightly, but you get the idea - the lowest rates will be available to those borrowers who are WELL below average risk. Such borrowers are not the target of p2p platforms, and are of little concern to us.
The majority of SS bridging loans are commercial not residential, and the majority are multi-million pound (remember some are split over several loans for ease of admin but need to be evaluated as a group e.g 51,52 & 53 total over £5m ). You're not going to find rates less than 18% anywhere for that.
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Liz
Member of DD Central
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Post by Liz on Oct 28, 2015 18:53:12 GMT
PBL's on Thincats can be 12-16%pa, on top of that you have sponsor fees, listing fees, monitoring fees, and possible underwriting fees. so 18% is about par.
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Maestro
Member of DD Central
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Post by Maestro on Oct 28, 2015 18:58:49 GMT
Disclaimer: I'm not complaining about SS 12% yield. I'm also not highly familiar with debt/loan markets.The page ( www.money.co.uk/bridging-loans.htm) quoted in another post gives you ranges of interest for bridging loans, starting around 0.7%/month level (8.4%), so who gets the lower one? Why secured loans are more expensive than unsecured (comparing SS vs RS/FC)? Why the borrowers from SS don't go to FC, Zopa, RS or others where they can get 8-9% instead of 18%. I just can't get my head around this following simple math (being software engineer). Is it the approval speed, loan amount, legal barriers? Can someone please shed some light? Another factor is that cash flow is not taken into account. Many(most) SS loans are not income producing - so we are taking sale/refinance risk. These risks will become lot more apparent if/when market/financial conditions turn.
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