andy2001
Member of DD Central
Posts: 361 
Likes: 34
|
Post by andy2001 on Jun 6, 2014 15:37:41 GMT
New bridging loan for 12 months, 11 month min charge 1% per month.
|
|
|
|
Post by andrewholgate on Jun 6, 2014 16:21:53 GMT
See. I said there were loans coming.
<grins>
|
|
|
|
Post by Ton ⓉⓞⓃ on Jun 6, 2014 20:34:18 GMT
I think this loan has been live for 5hours and is now 42% filled. Which is £175k
Clearly lot of money from Weston is finding a new cosy home here but for 12months not 6.
Note to self; Manchester Commercial Property.
|
|
unmadem
Member of DD Central
Posts: 377
Likes: 181
|
Post by unmadem on Jun 7, 2014 20:44:52 GMT
All (£420K) gone in 24hrs and 20 mins. A lot of pent up demand.
|
|
mikes1531
Member of DD Central
Posts: 6,453
Likes: 2,320
|
Post by mikes1531 on Jul 30, 2014 19:10:39 GMT
All (£420K) gone in 24hrs and 20 mins. A lot of pent up demand. I missed out on this one because I wasn't in a position to bid when it came available -- and then disappeared quickly. But I did pick up a bit via the Aftermarket earlier this month. Today I picked up enough to satisfy my AutoInvest target, so I revisited the loan page to see whether I might want to increase my target in case more units came up for sale. I looked at the repayment tab -- and was most surprised to see that the interest-only payments were 2%/month. Re-checking the Credit Report I can see that the difference between what the borrower was paying and what the lenders were getting was not disclosed at the time of the auction. In another thread, I expressed surprise that the 'spread' on another loan was so large -- it was 15.6% vs. 10% -- but I think this loan is even more surprising. To make matters worse, this loan also has a 2% fee payable with the bullet payment at maturity. If the valuation of the security is about right, there should be no worries about the riskiness of this loan, but I can't help wondering about any borrower who would agree to 2%/month interest, plus a 2% fee -- and a minimum term of 11 months. And if that weren't enough, the interest on this loan was retained at drawdown, so the proceeds to the borrower were something like £100k less than the amount of the loan. AC have what appears to be a real goldmine here! I dread to think what the quoted APR was. chris wasn't referring to this loan when he said... When you're charging your borrowers ~30% it's quite easy to pass on 12% of that. But the rates are that high for a reason... ... but I suppose it does apply here.
|
|
|
|
Post by chris on Jul 30, 2014 19:17:38 GMT
You're presuming that the margin goes to AC. I have no idea on the specifics of this loan and I doubt the business would want to publicly disclose the specific breakdown of fees, but the fee you're quoting will include all third party fees payable. AC's proportion will be in the same ballpark quoted elsewhere in this thread.
|
|
mikes1531
Member of DD Central
Posts: 6,453
Likes: 2,320
|
Post by mikes1531 on Jul 30, 2014 20:28:03 GMT
You're presuming that the margin goes to AC. I have no idea on the specifics of this loan and I doubt the business would want to publicly disclose the specific breakdown of fees, but the fee you're quoting will include all third party fees payable. AC's proportion will be in the same ballpark quoted elsewhere in this thread. I suppose I was. OK, the goldmine probably has a few stakeholders. However -- no matter who is on the receiving end -- the borrower still is paying quite a price for this loan.
|
|
|
|
Post by whitmanthecat on Jul 30, 2014 21:16:05 GMT
Something still doesn't smell right about the calculation. The Cen*** Lo**** Bridging Loan has a similar query in the Q&A. It is only the loans with retained interest at drawdown that seem odd. If the 'monthly' amounts are correct and the interest is retained, I calculate an APR of 33.7% - that seems well out of the territory of bridging loans. I think I've done the same calculation as mikes1531 with the loan being effectively borrow £319200 (based on deducting the 12 monthly interest payments from the initial advance), pay back £428400 in a year, . It might be that only the 1% interest per month is retained at the start and not the full amount. In any case, the monthly amount in the Repayments tab must be a fairly synthetic number , as there is no need for the borrower to physically pay it all if it has been held back at the start. The loan agreement would set out the total actually payable though is understandably never visible to individual lenders. A 'full' rate of around 30%pa to me carries a higher incentive / possibility of default than the more usual 12-14% or so. The thing is, the interest on retained interest (if that is how it works) is to the detriment of the borrower yet doesn't benefit AC or individual lenders as much as it could. If I understand correctly, retained interest sits in the trust account, a non-interest bearing account. I'm hoping there's a misunderstanding somewhere! |
|
|
|
Post by chris on Jul 30, 2014 21:24:52 GMT
Something still doesn't smell right about the calculation. The Cen*** Lo**** Bridging Loan has a similar query in the Q&A. It is only the loans with retained interest at drawdown that seem odd. If the 'monthly' amounts are correct and the interest is retained, I calculate an APR of 33.7% - that seems well out of the territory of bridging loans. I think I've done the same calculation as mikes1531 with the loan being effectively borrow £319200 (based on deducting the 12 monthly interest payments from the initial advance), pay back £428400 in a year, . It might be that only the 1% interest per month is retained at the start and not the full amount. In any case, the monthly amount in the Repayments tab must be a fairly synthetic number , as there is no need for the borrower to physically pay it all if it has been held back at the start. The loan agreement would set out the total actually payable though is understandably never visible to individual lenders. A 'full' rate of around 30%pa to me carries a higher incentive / possibility of default than the more usual 12-14% or so. The thing is, the interest on retained interest (if that is how it works) is to the detriment of the borrower yet doesn't benefit AC or individual lenders as much as it could. If I understand correctly, retained interest sits in the trust account, a non-interest bearing account. I'm hoping there's a misunderstanding somewhere! The system itself doesn't know that interest is retained, that's currently handled offline and the funds used to settle monthly repayments as they fall due like any other loan. So the figure on the site is the total being charged per month inclusive of anything that is paid for out of the retained interest.
|
|
mikes1531
Member of DD Central
Posts: 6,453
Likes: 2,320
|
Post by mikes1531 on Jul 31, 2014 1:58:19 GMT
The Cen*** Lo**** Bridging Loan has a similar query in the Q&A. That's the loan I was referring to when I mentioned the 15.6% vs. 10% spread. Possibly as a direct result of these questions being asked, the Credit Reports for the latest loans -- Do**** Pr****** De********* and No*** Wa*** -- do not show the payment details. Please chris and andrewholgate can we have that info? Its omission makes AC less transparent than before, and that's a discouraging move by AC. Also, there's no point in withholding that info from the credit report inasmuch as it will be visible on the Repayments tab once the loan is drawn down. All the omission from the Credit Report will accomplish is to give lenders yet another reason to wait for drawdown before investing, and I'm sure AC don't want to encourage that practice.
|
|
|
|
Post by chris on Jul 31, 2014 5:11:27 GMT
The Cen*** Lo**** Bridging Loan has a similar query in the Q&A. That's the loan I was referring to when I mentioned the 15.6% vs. 10% spread. Possibly as a direct result of these questions being asked, the Credit Reports for the latest loans -- Do**** Pr****** De********* and No*** Wa*** -- do not show the payment details. Please chris and andrewholgate can we have that info? Its omission makes AC less transparent than before, and that's a discouraging move by AC. Also, there's no point in withholding that info from the credit report inasmuch as it will be visible on the Repayments tab once the loan is drawn down. All the omission from the Credit Report will accomplish is to give lenders yet another reason to wait for drawdown before investing, and I'm sure AC don't want to encourage that practice. It's not coded yet but we're planning an upgrade to the system that manages the loan repayments that will go live in line with the new site. That will allow us to display the repayments tab prior to drawdown showing the repayment profile as relative months - e.g. month 1..., month 2..., etc. After drawdown specific dates will be given.
|
|
|
|
Post by cyrilmadrid on Jul 31, 2014 6:07:53 GMT
chris, please make sure that in the new version we can export the 'expiry date' of the loan units, that would be very useful.
|
|
mikes1531
Member of DD Central
Posts: 6,453
Likes: 2,320
|
Post by mikes1531 on Jul 31, 2014 15:32:05 GMT
That's the loan I was referring to when I mentioned the 15.6% vs. 10% spread. Possibly as a direct result of these questions being asked, the Credit Reports for the latest loans -- Do**** Pr****** De********* and No*** Wa*** -- do not show the payment details. Please chris and andrewholgate can we have that info? Its omission makes AC less transparent than before, and that's a discouraging move by AC. Also, there's no point in withholding that info from the credit report inasmuch as it will be visible on the Repayments tab once the loan is drawn down. All the omission from the Credit Report will accomplish is to give lenders yet another reason to wait for drawdown before investing, and I'm sure AC don't want to encourage that practice. It's not coded yet but we're planning an upgrade to the system that manages the loan repayments that will go live in line with the new site. That will allow us to display the repayments tab prior to drawdown showing the repayment profile as relative months - e.g. month 1..., month 2..., etc. After drawdown specific dates will be given. That would be helpful, chris. Thanks.
|
|
ramblin rose
Member of DD Central
“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
Posts: 1,370
Likes: 857
|
Post by ramblin rose on Jul 31, 2014 18:01:29 GMT
Something still doesn't smell right about the calculation. The Cen*** Lo**** Bridging Loan has a similar query in the Q&A. It is only the loans with retained interest at drawdown that seem odd. If the 'monthly' amounts are correct and the interest is retained, I calculate an APR of 33.7% - that seems well out of the territory of bridging loans. I think I've done the same calculation as mikes1531 with the loan being effectively borrow £319200 (based on deducting the 12 monthly interest payments from the initial advance), pay back £428400 in a year, . It might be that only the 1% interest per month is retained at the start and not the full amount. In any case, the monthly amount in the Repayments tab must be a fairly synthetic number , as there is no need for the borrower to physically pay it all if it has been held back at the start. The loan agreement would set out the total actually payable though is understandably never visible to individual lenders. A 'full' rate of around 30%pa to me carries a higher incentive / possibility of default than the more usual 12-14% or so. The thing is, the interest on retained interest (if that is how it works) is to the detriment of the borrower yet doesn't benefit AC or individual lenders as much as it could. If I understand correctly, retained interest sits in the trust account, a non-interest bearing account. I'm hoping there's a misunderstanding somewhere! Forgive me - I have to ask - have you ever tried getting bridinging finance? I'm no expert, but I looked into it a little, a year or two back and 30% plus was easily the right ball-park, and that was the cheaper end I seem to recall. I don't have all the figures to hand, but I know it was enough that I thought "that would be madness" and looked no further.
|
|
|
|
Post by whitmanthecat on Jul 31, 2014 20:12:52 GMT
Forgive me - I have to ask - have you ever tried getting bridinging finance? I'm no expert, but I looked into it a little, a year or two back and 30% plus was easily the right ball-park, and that was the cheaper end I seem to recall. I don't have all the figures to hand, but I know it was enough that I thought "that would be madness" and looked no further. I did look into it last year to facilitate keeping my old house for a while after completing on a new one. Rates of around 1% per month (though could have been 1.5% if a riskier case) were high enough to put me off (although a family arrangement in the end worked out better for all involved). I will admit that was a different kettle of fish being residential property. While that is the security for the CL bridging loan, this is secured on an office and so I now recognise quite a different profile. It is just the presentation of the repayments that means nearly a quarter of the borrowing is locked away where it cannot be touched and the borrower is paying £24,000 in interest on that locked away money (or 1/8th and £12k if just the individual lender interest is retained). I suppose in the bigger picture the borrower is just interested in how much they can borrow then how much and when it gets paid back, with another presentation (unseen to us) that is more useful to them. If the resulting APR is over 30%, then it is what it is.
|
|
