stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on Nov 17, 2016 23:24:35 GMT
On the point of early investments starting to accrue interest on the pm immediately could anyone confirm that, where a part is sold on sm then ALL the interest is paid by the buyer or is it lost?
example
pm investment £100 and goes 60days before going live accrues £2 interest at live date.
sell at day 30 would that give seller £3 or the £1 accrued since it went live?
assumes full £100 sells.
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mikes1531
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Post by mikes1531 on Nov 18, 2016 3:16:04 GMT
On the point of early investments starting to accrue interest on the pm immediately could anyone confirm that, where a part is sold on sm then ALL the interest is paid by the buyer or is it lost? example pm investment £100 and goes 60days before going live accrues £2 interest at live date. sell at day 30 would that give seller £3 or the £1 accrued since it went live? assumes full £100 sells. : I have a part of the Wirral Development loan that completed last week. I made my investment over two months ago, so I've accrued 63 days' worth of interest. I put it up for sale just now, and my 'parts for sale' listing shows the price would include 63 days of interest. So as near as I can tell, the answer is, yes, ALL. That's the good news. The bad news is that if I were to try to sell it, my part probably would be priced higher than most other parts of that loan offered at the same discount because I was an early investor, so I'd probably have trouble finding a buyer without increasing my discount.
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elliotn
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Post by elliotn on Nov 18, 2016 7:19:43 GMT
For different loan parts on SM where the borrower intends to repay smaller, later 'charges' first from part sales of the property, does the 'legal' priority of the charges only stand in the instance of a default ie borrower can repay active loans at his own prerogative until then?
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archie
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Post by archie on Nov 18, 2016 7:28:12 GMT
On the point of early investments starting to accrue interest on the pm immediately could anyone confirm that, where a part is sold on sm then ALL the interest is paid by the buyer or is it lost? example pm investment £100 and goes 60days before going live accrues £2 interest at live date. sell at day 30 would that give seller £3 or the £1 accrued since it went live? assumes full £100 sells. While a loan remains on the sm the price to the buyer will change daily to reflect the accrued interest. Price paid by the buyer would be capital +/- premium/discount on original capital + accrued interest.
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stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on Nov 18, 2016 10:00:57 GMT
On the point of early investments starting to accrue interest on the pm immediately could anyone confirm that, where a part is sold on sm then ALL the interest is paid by the buyer or is it lost? example pm investment £100 and goes 60days before going live accrues £2 interest at live date. sell at day 30 would that give seller £3 or the £1 accrued since it went live? assumes full £100 sells. : I have a part of the Wirral Development loan that completed last week. I made my investment over two months ago, so I've accrued 63 days' worth of interest. I put it up for sale just now, and my 'parts for sale' listing shows the price would include 63 days of interest. So as near as I can tell, the answer is, yes, ALL. That's the good news. The bad news is that if I were to try to sell it, my part probably would be priced higher than most other parts of that loan offered at the same discount because I was an early investor, so I'd probably have trouble finding a buyer without increasing my discount. Agreed Mikes1531. I had so much difficulty making this understood recently in comms to FS. Makes the following a good idea imho. Once a loan goes live then pay the accrued interest and reset the clock. I know it's done elsewhere. The effect would be to remove the disincentive to bidding early on the pm.
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mikes1531
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Post by mikes1531 on Nov 18, 2016 22:38:07 GMT
Agreed Mikes1531. I had so much difficulty making this understood recently in comms to FS. Makes the following a good idea imho. Once a loan goes live then pay the accrued interest and reset the clock. I know it's done elsewhere. The effect would be to remove the disincentive to bidding early on the pm. There's an additional advantage of such an approach as well, in that all an investor's parts of a given loan could be consolidated. That would shorten onvestors' lists of loan parts considerably. I went to sell a bit of a loan yesterday and found I had ten separate parts to choose from! Having put bits of some of them onto the SM, I now find that I can't tell which part on the SM goes with which part on my list of holdings. A lot could be done to simplify the situation, and hopefully fundingsecure are reading this forum and taking note of the good ideas being suggested.
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stevio
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Post by stevio on Nov 19, 2016 9:47:57 GMT
On the point of early investments starting to accrue interest on the pm immediately could anyone confirm that, where a part is sold on sm then ALL the interest is paid by the buyer or is it lost? example pm investment £100 and goes 60days before going live accrues £2 interest at live date. sell at day 30 would that give seller £3 or the £1 accrued since it went live? assumes full £100 sells. : I have a part of the Wirral Development loan that completed last week. I made my investment over two months ago, so I've accrued 63 days' worth of interest. I put it up for sale just now, and my 'parts for sale' listing shows the price would include 63 days of interest. So as near as I can tell, the answer is, yes, ALL. That's the good news. The bad news is that if I were to try to sell it, my part probably would be priced higher than most other parts of that loan offered at the same discount because I was an early investor, so I'd probably have trouble finding a buyer without increasing my discount. As the buyer receives the interest at the end of the loan, so if you invested early there would be more interest at the end of the loan, wouldn't this counteract the increased accrue interest to pay?
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mikes1531
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Post by mikes1531 on Nov 19, 2016 15:57:36 GMT
stub8535 : I have a part of the Wirral Development loan that completed last week. I made my investment over two months ago, so I've accrued 63 days' worth of interest. I put it up for sale just now, and my 'parts for sale' listing shows the price would include 63 days of interest. So as near as I can tell, the answer is, yes, ALL. That's the good news. The bad news is that if I were to try to sell it, my part probably would be priced higher than most other parts of that loan offered at the same discount because I was an early investor, so I'd probably have trouble finding a buyer without increasing my discount. As the buyer receives the interest at the end of the loan, so if you invested early there would be more interest at the end of the loan, wouldn't this counteract the increased accrue interest to pay? Yes and no. In either case, the buyer will end up with a net gain of interest received -- the difference between the accrued interest they 'bought' and the amount of interest they'll receive at payback -- that's consistent with the amount of time they hold the part. But if they're an individual taxpayer (i.e. not a company) they'll have more income to report and more tax to pay if they buy a part that started earning interest earlier than they would on a part that started earning interest later.
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stevio
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Post by stevio on Nov 19, 2016 19:52:45 GMT
As the buyer receives the interest at the end of the loan, so if you invested early there would be more interest at the end of the loan, wouldn't this counteract the increased accrue interest to pay? Yes and no. In either case, the buyer will end up with a net gain of interest received -- the difference between the accrued interest they 'bought' and the amount of interest they'll receive at payback -- that's consistent with the amount of time they hold the part. But if they're an individual taxpayer (i.e. not a company) they'll have more income to report and more tax to pay if they buy a part that started earning interest earlier than they would on a part that started earning interest later. You might be able to answer this question, I bought a loan on the SM at a discount that I thought might be paying back early. If it pays back early, then that's a higher profit for me, right?
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mikes1531
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Post by mikes1531 on Nov 20, 2016 2:36:24 GMT
Yes and no. In either case, the buyer will end up with a net gain of interest received -- the difference between the accrued interest they 'bought' and the amount of interest they'll receive at payback -- that's consistent with the amount of time they hold the part. But if they're an individual taxpayer (i.e. not a company) they'll have more income to report and more tax to pay if they buy a part that started earning interest earlier than they would on a part that started earning interest later. You might be able to answer this question, I bought a loan on the SM at a discount that I thought might be paying back early. If it pays back early, then that's a higher profit for me, right? As long as the discount is more than enough to pay any tax due on the 'inherited' income, I think the rate of return on the investment should be greater if it pays back early than if it runs to term.
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elliotn
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Post by elliotn on Nov 30, 2016 11:47:42 GMT
I only have a partial month's data but I think the following might work as a proof in total for future MTD interest accrued/repaid above SM cost (assuming all purchases on SM, repayments reinvested and no withdrawals):
Your Investments total + Interest to Date total (My Current Investments) + Available Funds = Month end 'total balance'
Less prior month end 'total balance' and current month bank deposits (summed from My Activity)
= MTD Interest accrued or paid.
I had one repayment which is included in Total Movement Credit (My Activity) and if I strip out original purchase cost this cross checks to 'total account' balance by adding the MTD interest above (or by adding Available Funds and MTD interest if deducting total capital/interest repaid).
Will I need to account for anything else to calculate this monthly?
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mikes1531
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Post by mikes1531 on Nov 30, 2016 15:59:28 GMT
I only have a partial month's data but I think the following might work as a proof in total for future MTD interest accrued/repaid above SM cost (assuming all purchases on SM, repayments reinvested and no withdrawals): Your Investments total + Interest to Date total (My Current Investments) + Available Funds = Month end 'total balance' Less prior month end 'total balance' and current month bank deposits (summed from My Activity) = MTD Interest accrued or paid. I had one repayment which is included in Total Movement Credit (My Activity) and if I strip out original purchase cost this cross checks to 'total account' balance by adding the MTD interest above (or by adding Available Funds and MTD interest if deducting total capital/interest repaid). Will I need to account for anything else to calculate this monthly? : You need to be careful where you get your Total Investment and Available Funds numbers from because these are reported in more than one place on the platform, and the AF numbers sometimes include and sometimes exclude any money you have tied up in investments awaiting activation. Another point to note is that when a loan is activated it shows at least 30 days' worth of interest 'earned' -- even if you invested only yesterday. You might wish to adjust for that if you're going to be trying to compare interest earned in one month with what you earned in other months.
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elliotn
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Post by elliotn on Dec 10, 2016 7:28:13 GMT
I only have a partial month's data but I think the following might work as a proof in total for future MTD interest accrued/repaid above SM cost (assuming all purchases on SM, repayments reinvested and no withdrawals): Your Investments total + Interest to Date total (My Current Investments) + Available Funds = Month end 'total balance' Less prior month end 'total balance' and current month bank deposits (summed from My Activity) = MTD Interest accrued or paid. I had one repayment which is included in Total Movement Credit (My Activity) and if I strip out original purchase cost this cross checks to 'total account' balance by adding the MTD interest above (or by adding Available Funds and MTD interest if deducting total capital/interest repaid). Will I need to account for anything else to calculate this monthly? : You need to be careful where you get your Total Investment and Available Funds numbers from because these are reported in more than one place on the platform, and the AF numbers sometimes include and sometimes exclude any money you have tied up in investments awaiting activation. Another point to note is that when a loan is activated it shows at least 30 days' worth of interest 'earned' -- even if you invested only yesterday. You might wish to adjust for that if you're going to be trying to compare interest earned in one month with what you earned in other months. Many thanks for the pointers Mike. I see on p2pblog's reconciliation they had to resolve these issues too. Two things will make this simpler for me: 1) I'm only bottom-feeding on short-dated, discounted loan parts on SM so will avoid the activation/min interest 'traps'; 2) the money app that I record mtd interest in is cash only so I shd be able to fish that out from Investment History less loan/interest purchase costs from My Activity and try to get a snapshot on last day of month to rec total balance. As I will not be selling on FS I'm only in line for interest on redemption - the sum of a month's hard labour in Nov was 23p for the early repayment of Model B so I'm hoping Dec is a slightly more fruitful month to bring my mly interest back into line!
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mikes1531
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Post by mikes1531 on Dec 10, 2016 22:14:54 GMT
... the money app that I record mtd interest in is cash only so I shd be able to fish that out from Investment History less loan/interest purchase costs from My Activity... One of the shortcomings of the My Activity info is that you can't tell how the difference between the face amount of a part and the price you paid for it is split between interest and premium/discount.
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SteveT
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Post by SteveT on Dec 12, 2016 11:21:34 GMT
On a slightly different tack, I would like to ask those of you who buy on the SM, with a focus on zero/lower rate tax payers/company buyers, 1 What residual length of loan you target/feel is optimum to buy? 2 What is your discount threshold to realistically plan to buy? It entirely depends on the specifics of the loan in question. There are plenty I wouldn't touch at 1.5% discount and 31 days remaining. Others I am quite happy to pick up at 70 days remaining and 0.7% discount.
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