investibod
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Post by investibod on Dec 12, 2015 23:24:32 GMT
Hi, this is probably a newbie question, but I do not see the answer in the FAQ.
I have lent 2 tranches of money in the 5 year market and in the loan contract details it states that both have a term of 60 months. However, looking on the repayments schedule is shows that one loan will be repaid over 5 years and the other over 4 years.
Is they any way to tell or control the term over which money will be leant in the 5 year market?
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spiral
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Post by spiral on Dec 13, 2015 9:37:30 GMT
Welcome to the forum investibod.
4 and 5yr markets are grouped together and whether you lend to a 4 or 5 yr borrower just depends on where you are in the queue when the next loan is made.
Really you should think of the 5yr market as "up to 5 yrs" as there is always the (fairly high) probability that even 5 yr terms will pay back early.
I think it's something like 1/3 will pay back before term and of those about 1/10 in the first year.
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investibod
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Post by investibod on Dec 13, 2015 18:32:19 GMT
Thanks for the reply spiral
So there is a good chance that by investing in the 5 year market, you can get the higher interest rates that are offered for tying up your money for that time, without actually tying your money up for so long. I understood that there was always the possibility of an early payback, but thought that initially the loan would be for 5 years.
I have no issue in principle with the loan only being for 4 years, but still wonder why the contract details say that the loan is for 60 months. I guess that this is a little foible of Rate Setter that I need to get used to.
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adrianc
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Post by adrianc on Dec 13, 2015 19:07:25 GMT
It's entirely possible that the second loan is indeed a five-year loan, but that it's "second-hand", and the original lender has cashed it out after a year of the term.
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Post by westonkevRS on Dec 13, 2015 22:05:22 GMT
I have no issue in principle with the loan only being for 4 years, but still wonder why the contract details say that the loan is for 60 months. I guess that this is a little foible of Rate Setter that I need to get used to. If you direct message me your user ID or better still the contract #, I'll happily investigate. Or if it makes you feel more secure email me at Kevin.Allen@ratesetter.com Kevin.
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markr
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Post by markr on Dec 14, 2015 12:27:41 GMT
So there is a good chance that by investing in the 5 year market, you can get the higher interest rates that are offered for tying up your money for that time, without actually tying your money up for so long. Yes, but this can be a good or bad thing depending on your investment goals. If you're just reinvesting returns, it makes little odds. If you're trying to plan a defined income for a defined period (e.g. I want £X per month until I retire in 5 years), it's a pain to have extra funds returned early.
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investibod
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Post by investibod on Dec 14, 2015 12:29:40 GMT
Thanks Kev. I have sent you a PM.
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Post by westonkevRS on Dec 15, 2015 20:03:35 GMT
Thanks Kev. I have sent you a PM. Funnily enough in all my time lending on the 5-year market, I'd never really looked at the contracts. And I'd certainly never noticed the 5 year notes on 4 year loans. I leave the contract wording to the legal bods, I just look for my 6% return.... The contract highlighted by investibod is for a 4-year loan hence their are 48 monthly repayments of interest plus capital. Although the contract says 5-years, as this refers to the market from which the money was sourced. For example the monthly money always says monthly on them, rather than the term of the loan the apply to. A quirk, but one designed as such! Kevin.
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