Xero is down about 50% for me... No thanks!
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The post Xmas defaults are now coming thru. My arrears have jumped by 20% almost instantly this week. Hopefully this is normal for time or of year and settled back down.
Also I note the autolend issue with the changed criteria from weeks ago still exists. The last autolend loan I had filled was still back in mid Dec so I have been doing them manually now since I refuse to change my autolend rules .
Just a note to those who are not aware.
Harmoney takes its cut of the payment protect fees up front. Should the borrower repays the loan early, they are entitled to a refund of their fees. That refund (including Harmoney's portion) comes from us investors. So you probably are out of pocket with early repayments.
Time will tell if it still works out okay for us investors in the long run. It all depends on how many payments are waived and how much is the percentage of early repayments.
eeekk i dont think i will be doing any more PP loans then
I presume that PP loans can be increased by paying off and redrawing a larger amount?
If so is the PP fee renegotiated?
As I understand it; Payment protect is paid by the borrower and becomes additional to the lender's principal outstanding e.g. $25 note becomes say $26.23
From the dashboard, subtracting ones "Loan investments funded" from the "Borrower Principal amount", shows the Total P/P added.
If for example one had $100 p/p outstanding and all the loans went full term and repaid then there would be an additional $100 in ones cash balance.
Along the way early repayments will cause an adjustment to both lender and borrower rebates.
I currently have about $90 in P/P capital and to date with some early repayments, have $1.50 lender rebate and about -$8.50 borrower rebates with no principal waivers yet.
So my outstanding P/P balance is about $83. Now hypothetically if all the p/p the loans went full term with no waivers or early repayments, I would make $83 extra profit??!!
On my spreadsheet I also counter the p/p $ capital against my write-off $ value. So in time I would like to consider that the p/p value will cancel out the written off amount.:)
You made $1.50 from the loans that were repaid early. But you have to pay the borrower $8.50 meaning you are out of pocket by $7. That is the point I was making in my earlier post.. If those loans had gone to maturity, your $1.50 will be much more and the borrower's $8.50 will be $0. So, for early repayment we lose out.
There is a writeup somewhere in harmoney site but I cannot find it. Harmoney takes 15% and 20% up front for commission and fees. For early repayment, they do not refund the two. But for rewrites, they refund one and not the other. However, the borrower gets the unused portion of the PP back for both early repayments and rewrites. Meaning that the difference comes from us.
I am not saying that we will definitely lose out. It just depends on how much PP loans were repaid early or rewritten and of course how much waivers there are.
Btw, my figures are: I earned $9+ for lenders rebate for the early repayments/rewrites and I paid out $95+ to the borrowers for those loans. No waivers so far too. In the perfect world of no more early repayments/rewrites and no waivers for the remaining PP loans, I will eventually be about $1800 better off in 5 years. I do hope that it will be at least half of that. But we will only know in 5 years time.
Of course, we also get a little more in interest as the loan o/s is higher than what we loan out.