|
|
Post by turtle on Apr 7, 2016 21:09:44 GMT
The minimum is actually 1p these days, boomingaway . Personnally I invest small numbers in all the loans that I like and nothing in those I don't. On SS thats 30+ loans currently invested. Getting in unless the SM is in feast mode can be hard, so prefunding requests on new loans is probably the simplest way to do it. That said, I would only invest in loans which pass my due diligence, even at prefunding stage. How do you decide if you 'like' a loan? What would be a red flag in your DD?
|
|
adrianc
Member of DD Central
Posts: 10,019 
Likes: 5,147
|
Post by adrianc on Apr 7, 2016 21:53:20 GMT
How do you decide if you 'like' a loan? What would be a red flag in your DD? Read the valuation doc, read the description, read anything posted here, do some googling. Red flags vary from loan to loan, and from lender to lender.
|
|
|
|
Post by boomingaway on Apr 8, 2016 7:58:28 GMT
What is the approximate timeframe of loans going from stage 1 to 2 to 3 in prefunding? When do we start earning interest?
|
|
adrianc
Member of DD Central
Posts: 10,019
Likes: 5,147
|
Post by adrianc on Apr 8, 2016 8:01:02 GMT
What is the approximate timeframe of loans going from stage 1 to 2 to 3 in prefunding? When do we start earning interest? The approximate timeframe can be anything from "straight in at 3" to "an eternal month of Sundays". There is no rhyme nor reason nor predictability. We start earning interest when the loan is launched and we're allocated parts in it. If we don't pay for the parts, then the interest is voided when they're taken back.
|
|
|
|
Post by boomingaway on Apr 8, 2016 8:44:04 GMT
I read that interest is paid on the first of every month. Is interest paid out even if the borrower doesn't make a payment?
|
|
SteveT
Member of DD Central
Posts: 6,875
Likes: 7,924
|
Post by SteveT on Apr 8, 2016 8:47:42 GMT
I read that interest is paid on the first of every month. Is interest paid out even if the borrower doesn't make a payment? Insofar as we are led to believe by SS, interest on all loans is withheld upfront from the loan sum advanced to cover all payments to term. However there have been (and perhaps still are) some inconsistencies between the published term on the website and the number of months for which interest has been withheld. Bottom line is that every loan has paid out interest every month to date since SS began ... but one cannot assume that will inevitably be the case if a future loan defaults. [ ilmoro, perhaps this is another question that could be added to the first post?]
|
|
locutus
Member of DD Central
Posts: 1,059
Likes: 1,622
|
Post by locutus on Apr 8, 2016 8:48:05 GMT
I read that interest is paid on the first of every month. Is interest paid out even if the borrower doesn't make a payment? Interest for the whole term is collected upfront and paid on the borrower's behalf by SS.
|
|
|
|
Post by boomingaway on Apr 8, 2016 8:51:45 GMT
I read that interest is paid on the first of every month. Is interest paid out even if the borrower doesn't make a payment? Interest for the whole term is collected upfront and paid on the borrower's behalf by SS. I don't understand this. Why would a borrower borrow money and immediately pay back the interest for the whole term?
|
|
SteveT
Member of DD Central
Posts: 6,875
Likes: 7,924
|
Post by SteveT on Apr 8, 2016 8:55:48 GMT
Interest for the whole term is collected upfront and paid on the borrower's behalf by SS. I don't understand this. Why would a borrower borrow money and immediately pay back the interest for the whole term? Very crudely, say you want £1m for 1 year and have property assets worth £1.5m but insufficient ongoing income to cover monthly interest payments until you sell / refinance the property. You borrow £1.15m against it, are advanced the £1m you're after and approx £150k is retained by SS to cover the interest to lenders for 12 months. [In practice, bridging finance is even more expensive than this as there are upfront fees and also the rate charged by SS is rather higher than 12%pa, but the principle is the same]
|
|
|
|
Post by boomingaway on Apr 8, 2016 9:18:06 GMT
I don't understand this. Why would a borrower borrow money and immediately pay back the interest for the whole term? Very crudely, say you want £1m for 1 year and have property assets worth £1.5m but insufficient ongoing income to cover monthly interest payments until you sell / refinance the property. You borrow £1.15m against it, are advanced the £1m you're after and approx £150k is retained by SS to cover the interest to lenders for 12 months. [In practice, bridging finance is even more expensive than this as there are upfront fees and also the rate charged by SS is rather higher than 12%pa, but the principle is the same] Ah, that makes sense. So, am I right in assuming then that the interest payments are always guaranteed unless the loan gets extended? Is the only thing at risk then our principal?
|
|
SteveT
Member of DD Central
Posts: 6,875
Likes: 7,924
|
Post by SteveT on Apr 8, 2016 9:25:03 GMT
Very crudely, say you want £1m for 1 year and have property assets worth £1.5m but insufficient ongoing income to cover monthly interest payments until you sell / refinance the property. You borrow £1.15m against it, are advanced the £1m you're after and approx £150k is retained by SS to cover the interest to lenders for 12 months. [In practice, bridging finance is even more expensive than this as there are upfront fees and also the rate charged by SS is rather higher than 12%pa, but the principle is the same] Ah, that makes sense. So, am I right in assuming then that the interest payments are always guaranteed unless the loan gets extended? Is the only thing at risk then our principal? I avoid using the word "guaranteed" in relation to P2P. However you're right that, in theory (subject to SS as a platform staying on the straight & narrow), interest payments should be expected on time and in full each month until the withheld interest is all paid out. Many SS lenders like to hold 12 month loans for 9 - 10 months and then "re-home" them via the SM, but you can't assume that will always be possible.
|
|
adrianc
Member of DD Central
Posts: 10,019
Likes: 5,147
|
Post by adrianc on Apr 8, 2016 9:52:52 GMT
Is the only thing at risk then our principal? Yep. It's entirely possible that the borrower will collapse with huge debts, and the asset will turn out to be meaningless. You could lose everything - well, except for the few months worth of interest that SS retain.
|
|
brin
I am trying to stay calm.
Posts: 379
Likes: 69
|
Post by brin on Apr 8, 2016 9:59:24 GMT
yea agree, i wrote somewhere recently that its very unsettling to think that in a downturn the value could drop significantly, then the borrower defaults, then there are no buyers for the asset, and it will have to go at what ever it realizes. i suppose the only consolation is the interest you will have been paid.
|
|
|
|
Post by Deleted on Apr 8, 2016 10:23:29 GMT
Is the only thing at risk then our principal? Yep. It's entirely possible that the borrower will collapse with huge debts, and the asset will turn out to be meaningless. You could lose everything - well, except for the few months worth of interest that SS retain. Of course anything is possible, even Armageddon where all assets become worthless. Question is always about probability and the risk v reward, all investors here must believe the reward is worth the risk at this moment in time otherwise they wouldn't be here.
|
|
goopy
Member of DD Central
Posts: 307
Likes: 144
|
Post by goopy on Apr 8, 2016 11:23:49 GMT
I'm changing my broadband provider soon and will need to change my email address. I can't see anywhere on the platform to update it does anyone know how it's done?
|
|
