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Post by westonkevRS on Mar 18, 2016 7:09:10 GMT
Hi @jimsgirl and welcome to RateSetter,
There are no fees from the monthly product, which I think has now been rebranded "easy access". Although this does depend on liquidity which has never been a problem in the last 5 years. But this access comes at the price of lower returns, which recently have been averageing between 2.8% and 3.5% with the odd spike either way.
All the other products you can access early, through the "sell-out" function. But there is a cost as the loans have to be refinanced as we want to avoid "gamers" taking the higher interest rates knowing they plan to withdraw early. The fee varies depending on the rates you previously attained compared to today's going rates, as you loans have to be filled. Therefore the actual cost can vary, but if you search "sell-out" on this forum I'd argue the average seems to be around 0.6%, but can vary from near £zero to 3% in some circumstances.
The 3 and 5 years products are amortising, so you can choose just to take all the interest and capital as it gets repaid. Typical with early repayments this does mean you'll get about half your money back within the first third of the loan term. Although forumites have probably calculated a more accurate number....
If you search around in the T&Cs on the web site it does provide more detail. Personally though, I never lend money in the 3 and 5 year markets that I wouldn't ever expect to need except in an emergency.
Kevin.
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t5
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Post by t5 on Mar 18, 2016 7:12:38 GMT
There are no safe P2P, just some are safer than others and I think rate setter''s history and awards speak for themselves. There is a risk and you have to be happy with that. Being a green horn in P2P investing, I did my research, but asked the wrong questions which led me to investing an amount in a time frame I wasn't happy with. The rate setter process was simple and quick for me to get out. It did cost me a small amount to do this, but it was more than acceptable. I have now asked the right questions and have dipped my toe in again. I currently have money in the monthly lending. Whilst not great rates by P2P standards, beats any other outside of P2P lending. Also the bonus is they have just scrapped charges for getting access to your money. I now think of it as a easy access account with a respectable rate. How long no access charges remain we will have to see.
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Post by GSV3MIaC on Mar 18, 2016 8:27:04 GMT
westonkevRS .. Too many negatives in your last sentence?
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jimc99
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Post by jimc99 on Mar 18, 2016 9:04:39 GMT
Please be aware that there are substantial charges made if you invest your money in say the 3 and 5 year markets then sell out after say 1 year.
Since your likely to think about the longer term markets for your kids money it's IMPORTANT you know this!
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Post by settersam on Mar 18, 2016 9:24:03 GMT
According to the calculator I will be hit with approx £90 in fees if I sellout my 3 year portfolio - is this tax deductible?
i.e. If I had received £200 in interest this year, would I need to pay tax on the full £200 or on just £110?
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sl75
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Post by sl75 on Mar 18, 2016 10:04:02 GMT
According to the calculator I will be hit with approx £90 in fees if I sellout my 3 year portfolio - is this tax deductible? i.e. If I had received £200 in interest this year, would I need to pay tax on the full £200 or on just £110? Whilst I can't answer your actual question, note that RateSetter are quite sneaky with those sellout fees... A very large proportion of the fee is generated from a very small portion of the portfolio - the incremental rate can see fees in excess of 50% of the capital received, so you're usually best off asking for a quote for a bit less than the total (and borrow the rest from a payday lender if necessary - it can be cheaper overall!) You'll have to do the sums to figure out the incremental fee yourself [e.g. by getting sellout quotes for different amounts], because RateSetter try to hide this information from you. The loans that will be left behind when you do a partial sell-out (and which generate astronomical fees) are the ones that will be fully repaid within the next few months anyway.
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adrianc
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Post by adrianc on Mar 18, 2016 10:12:05 GMT
Please be aware that there are substantial charges made if you invest your money in say the 3 and 5 year markets then sell out after say 1 year. "Substantial" is a massive exaggeration. The higher the percentage of your investment, the more it'll cost you, because a partial withdrawal takes the cheapest-to-sell portion. Nothing "sneaky" about that, sl75 , and nothing to do with remaining term - just to do with higher rates you might have on some parts... If I look to withdraw some of my 5yr market money - mostly there for a year or more, reinvested as it gets repaid, average 6.4%, lowest 5.8% but not much under 6.0%, highest 6.9% with quite a bit at 6.7%, last-matched currently 6.1% - it'll cost me... For quarter of the total, 0.1% For half, 0.275%. For three quarters, 1% For all of it, 1.75%. (all those are after offsetting the outstanding interest against the sell-out fees) I don't think 1.75% is bad at all - and 0.1% is ridiculously cheap.
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sl75
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Post by sl75 on Mar 18, 2016 10:39:34 GMT
Please be aware that there are substantial charges made if you invest your money in say the 3 and 5 year markets then sell out after say 1 year. "Substantial" is a massive exaggeration. The higher the percentage of your investment, the more it'll cost you, because a partial withdrawal takes the cheapest-to-sell portion. Nothing "sneaky" about that, sl75 , and nothing to do with remaining term - just to do with higher rates you might have on some parts... If I look to withdraw some of my 5yr market money - mostly there for a year or more, reinvested as it gets repaid, average 6.4%, lowest 5.8% but not much under 6.0%, highest 6.9% with quite a bit at 6.7%, last-matched currently 6.1% - it'll cost me... For quarter of the total, 0.1% For half, 0.275%. For three quarters, 1% For all of it, 1.75%. (all those are after offsetting the outstanding interest against the sell-out fees) I don't think 1.75% is bad at all - and 0.1% is ridiculously cheap. There are two sneaky things going on here. The first is the way that you (and others who aren't paying attention) think they're only paying a 1.75% fee. 1.75% is the average fee for selling out the whole lot, but we already know that the average fee for the first 3/4 of the portfolio was 1%, so to get the average fee for the whole lot to 1.75%, the fee for selling the final 1/4 must be about 4% (because 1%*3/4 + 4%*1/4 = 1.75%) Do you still think that the 4% fee for the final quarter of your portfolio is "not bad", or is that starting to look bad to you? Within that final quarter, there'll be a similar increase in fee, and I previously saw fees in the region of 50% for some loans, which is just plain ridiculous. RateSetter have carefully hidden the huge fees by showing you only the average, with absolutely no indication that much larger fees are being charged on the final portion. The only ways you'd see it directly quoted on the website are if: 1. You sell out bit by bit, so that by the time you get a quote for the final portion that's all that's left. 2. You've been running down your portfolio for a couple of years, and are getting a quote for loans that are already very mature. Otherwise you need to get multiple quotes in order to work out the incremental fee for yourself. At no point do they show you the fee broken down by loan part in order to allow an informed decision without doing a lot of donkey-work for yourself. The other way that it seems "sneaky" to me is a bit more subtle - they charge you fees not only based on the amount you're selling out for the time it's been invested, but also on the entire amount that has already been repaid under the loan contract. This is what causes the fees to rise to ridiculous levels in the first place.
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adrianc
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Post by adrianc on Mar 18, 2016 10:49:45 GMT
"Substantial" is a massive exaggeration. The higher the percentage of your investment, the more it'll cost you, because a partial withdrawal takes the cheapest-to-sell portion. Nothing "sneaky" about that, sl75 , and nothing to do with remaining term - just to do with higher rates you might have on some parts... If I look to withdraw some of my 5yr market money - mostly there for a year or more, reinvested as it gets repaid, average 6.4%, lowest 5.8% but not much under 6.0%, highest 6.9% with quite a bit at 6.7%, last-matched currently 6.1% - it'll cost me... For quarter of the total, 0.1% For half, 0.275%. For three quarters, 1% For all of it, 1.75%. (all those are after offsetting the outstanding interest against the sell-out fees) I don't think 1.75% is bad at all - and 0.1% is ridiculously cheap. There are two sneaky things going on here. The first is the way that you (and others who aren't paying attention) think they're only paying a 1.75% fee. 1.75% is the average fee for selling out the whole lot, but we already know that the average fee for the first 3/4 of the portfolio was 1%, so to get the average fee for the whole lot to 1.75%, the fee for selling the final 1/4 must be about 4% (because 1%*3/4 + 4%*1/4 = 1.75%) Do you still think that the 4% fee for the final quarter of your portfolio is "not bad", or is that starting to look bad to you? Within that final quarter, there'll be a similar increase in fee, and I previously saw fees in the region of 50% for some loans, which is just plain ridiculous. RateSetter have carefully hidden the huge fees by showing you only the average, with absolutely no indication that much larger fees are being charged on the final portion. The only ways you'd see it directly quoted on the website are if: 1. You sell out bit by bit, so that by the time you get a quote for the final portion that's all that's left. 2. You've been running down your portfolio for a couple of years, and are getting a quote for loans that are already very mature. Otherwise you need to get multiple quotes in order to work out the incremental fee for yourself. At no point do they show you the fee broken down by loan part in order to allow an informed decision without doing a lot of donkey-work for yourself. The other way that it seems "sneaky" to me is a bit more subtle - they charge you fees not only based on the amount you're selling out for the time it's been invested, but also on the entire amount that has already been repaid under the loan contract. This is what causes the fees to rise to ridiculous levels in the first place. Yes, but I don't care what the marginal fee for the last quarter is. If I'm withdrawing the whole lot, I care what the fee is for the whole lot. If I'm withdrawing some, I care what the fee is for that portion. 1.75% to sell out a FIVE YEAR investment after a year and a snidge is cheap. 0.1% to sell out a quarter of it is damn near instant access.
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locutus
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Post by locutus on Mar 18, 2016 11:01:44 GMT
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locutus
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Post by locutus on Mar 18, 2016 11:05:21 GMT
I just did the Sell Out calculation again and trying to sell out £15,431.06 (rate today is 6.2% and I am selling out 5.8%) will cost me £704.51 Excluding the assignment fee, the cost is £572.06. So approx 3.7% cost of selling out.
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sl75
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Post by sl75 on Mar 18, 2016 11:13:35 GMT
Yes, but I don't care what the marginal fee for the last quarter is. If I'm withdrawing the whole lot, I care what the fee is for the whole lot. If I'm withdrawing some, I care what the fee is for that portion. If you're committed to withdrawing the whole lot regardless of the fee, then of course the fee for the whole lot is all that's relevant. However, if you're deciding whether to withdraw the whole lot, or only part, depending on the fee, the fee for the last quarter is VERY relevant, especially if you have another source of funds that you can access for less than the equivalent of a 4% fee. For those who are aware of these sneaky tricks, it would seem the easiest approach would be to use the sellout function several times - this way you'll be correctly quoted the fee for selling out each portion, and can stop when it gets too high, however, I'm sure plenty of people are duped into accepting the "average fee" and never even realise the huge fees that were incorporated into it for selling out the last few loan parts, because they're never displayed anywhere.
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alender
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Post by alender on Mar 18, 2016 13:07:16 GMT
While I do believe there should be a sell out charge to stop people playing the market and therefore selling after the rate has risen and then reinvesting, these should be clear and easy to calculate. When getting a quote the fees should be broken down so that the person selling out has a clear idea of fees on each of the loans so is able to make a rational decision on what to sell.
For early repayment when loan is above market rates there should be an additional payment to the lender to take this into account. I am not sure what the legal position is on early repayment of loans but if possible lenders and borrowers should be treated the same. I have noticed that my early repayments (including the one month market) have tended to be on my higher rate loans which makes we wonder if borrowers are refinancing at a lower rate therefore doing the equivalent of gaming for lenders (in Kevin’s words).
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Post by p2plender on Mar 18, 2016 16:27:54 GMT
Selling a 5yr fixed savings bond early usually attracts 1 years interest penalty. Just saying.
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locutus
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Post by locutus on Mar 18, 2016 16:35:46 GMT
Selling a 5yr fixed savings bond early usually attracts 1 years interest penalty. Just saying. P2P should aspire to be better than that. If I lend money for 5 years but decide I need my money back after 3 years and there is someone in the market willing to take these off my hands, why should it cost anything at all? I get my money out after 3 years, the new lender gets a 5 year rate for 2 years and the original borrower remains unaffected. Everyone is happy apart from RS who don't get to skim off the top. If RS don't innovate, others will. It is simply a matter of time.
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