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Post by badger on Feb 14, 2014 11:32:19 GMT
I'm a newbie to Assetz, but I see on this forum several people recommend the aftermarket to avoid drawdown delays.
How does it work with monthly interest payments? Is it worth timing the purchase until just before interest is due, or is the next month's interest pro-rata'd between the seller and buyer?
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mikes1531
Member of DD Central
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Post by mikes1531 on Feb 14, 2014 11:37:59 GMT
I'm a newbie to Assetz, but I see on this forum several people recommend the aftermarket to avoid drawdown delays.
How does it work with monthly interest payments? Is it worth timing the purchase until just before interest is due, or is the next month's interest pro-rata'd between the seller and buyer? The seller is entitled to interest up to the date of sale. When the next payment is received, the interest element is divided between the seller and the buyer.
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Post by badger on Feb 14, 2014 11:42:34 GMT
Thanks, that's fine
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Post by chris on Feb 14, 2014 11:54:31 GMT
Our aftermarket is unique in the way it handles accrued interest, which may affect your decision. Any interest accrued up to the point of sale is deferred to the next repayment date where it is split out from the rest of the repayment and sent directly to the seller of the loan part.
So if you buy a loan part you do not have to pay the interest accrued up to that point to the seller, and therefore are not carrying additional risk should the borrower default. You pay the capital amount of the loan unit there and then, and when the next repayment is made the seller gets their accrued interest and you get the capital payment and any interest that you have accrued.
Also uniquely we have several different structures with our loans. There can be payment free periods, interest only periods, different amortisation periods, etc. So the optimal strategy may vary with different loan types.
Of course given the speed at which most loan units sell on the aftermarket the optimal strategy may just be to buy as soon as you see something you're after, as there's no guarantee that there'll be loan units for sale at the point you would ideally target.
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