Harmoney

[Investor]

I suspect these anomalies are due to the loan being re-written i.e. it was probably a holiday expense loan that has been re-written to include funeral expenses or the other way round?

Yeah you're probably correct. I'm just poking fun at it, I don't have any serious complaints about Harmoney.

I know this has been discussed previously but does anyone have any updated input about Payment Protect? I think that the investor only receives the full premium once a loan is fully repaid at maturity, so it may take years to see if it was worthwhile. So far I've lost more to the net effect of payment protect payment waivers/lender rebates than I have from defaults. I'm now avoiding these loans after previously deciding to invest in them to avoid missing opportunities to invest.

[RMJH]

Yeah you're probably correct. I'm just poking fun at it, I don't have any serious complaints about Harmoney.

I know this has been discussed previously but does anyone have any updated input about Payment Protect? I think that the investor only receives the full premium once a loan is fully repaid at maturity, so it may take years to see if it was worthwhile. So far I've lost more to the net effect of payment protect payment waivers/lender rebates than I have from defaults. I'm now avoiding these loans after previously deciding to invest in them to avoid missing opportunities to invest.

If we had the tax certificates we could work out the net PP result for the last year. I must admit I don't even know what the dashboard figures actually represent or how to calculate a running total of net PP result!

[permutation]

... I must admit I don't even know what the dashboard figures actually represent or how to calculate a running total of net PP result!

As I understand it, the PP running amount can be seen on the Account Summary page as follows:

(Borrower Principal amount ) - (Loan Investments funded) - (Protect Rebates Borrower) + (Protect Rebates Lender) = Current Running $Value

The "Lender Rebate" is the realized amount, crystallized due to a rewrite or early repayment.

As the loan heads towards full term, more and more of the P/P fee becomes a credit to the Lender.

[icyfire]

Borrower making almost $10k a month after tax needs $17k to go on holiday. Just hard to believe the monthly income
Screenshot_9.jpg

[RMJH]

As I understand it, the PP running amount can be seen on the Account Summary page as follows:

(Borrower Principal amount ) - (Loan Investments funded) - (Protect Rebates Borrower) + (Protect Rebates Lender) = Current Running $Value

The "Lender Rebate" is the realized amount, crystallized due to a rewrite or early repayment.

As the loan heads towards full term, more and more of the P/P fee becomes a credit to the Lender.

Thanks. My total is $4356 which seems very high though I guess some of that will never be earned due to early repayment.

[myles]

I know this has been discussed previously but does anyone have any updated input about Payment Protect? I think that the investor only receives the full premium once a loan is fully repaid at maturity, so it may take years to see if it was worthwhile. So far I've lost more to the net effect of payment protect payment waivers/lender rebates than I have from defaults. I'm now avoiding these loans after previously deciding to invest in them to avoid missing opportunities to invest.

I suspect the provided figures in the 'My Dashboard' may be a bit confusing. My rough interpretation:

Protect Rebates (Lender): The amount of PP rebate paid to lender at this point in time.
Protect Rebates (Borrower): The amount of PP rebated due to early repayment - this is not a loss, this is balancing the Outstanding Principal which is inflated when the PP is taken out.
Principal waived: This is a loss due to a payment not being made.

When a PP is taken out, the lenders Outstanding Principal value is inflated above the value of the loan - this results in a higher gross interest return which, combined with the PP payment by the borrower throughout the loan, gives the benefit. I assume the PP 15%pa management fee is included in the Service / Lender fees...

It is difficult to put in words - have a look at the examples Harmoney provide which may help?

https://www.harmoney.co.nz/payment-protect/lenders

Added: The 'Premium' does not get paid at the end of the loan - PP is paid throughout the loan. However, rebates are paid at early termination of the loan.

[Cool Bear]

I suspect the provided figures in the 'My Dashboard' may be a bit confusing. My rough interpretation:

Protect Rebates (Lender): The amount of PP rebate paid to lender at this point in time.
Protect Rebates (Borrower): The amount of PP rebated due to early repayment - this is not a loss, this is balancing the Outstanding Principal which is inflated when the PP is taken out.
Principal waived: This is a loss due to a payment not being made.

When a PP is taken out, the lenders Outstanding Principal value is inflated above the value of the loan - this results in a higher gross interest return which, combined with the PP payment by the borrower throughout the loan, gives the benefit. I assume the PP 15%pa management fee is included in the Service / Lender fees...

It is difficult to put in words - have a look at the examples Harmoney provide which may help?

https://www.harmoney.co.nz/payment-protect/lenders

Added: The 'Premium' does not get paid at the end of the loan - PP is paid throughout the loan. However, rebates are paid at early termination of the loan.

Protect Rebates (Lender): This is the amount of PP rebate paid back to you as the investor for early settlements (repayments) of the loans - so you gain this amount.
Protect Rebates (Borrower): The is the amount of PP rebated to the borrower for early repayment and it comes from your account so it is a LOSS.
Principal waived: This is a loss due to a payment not being made. (this is correct)

For the three items above, I have lost about $2400 so far.

[Cool Bear]

Protect Rebates (Lender): This is the amount of PP rebate paid back to you as the investor for early settlements (repayments) of the loans - so you gain this amount.
Protect Rebates (Borrower): The is the amount of PP rebated to the borrower for early repayment and it comes from your account so it is a LOSS.
Principal waived: This is a loss due to a payment not being made. (this is correct)

For the three items above, I have lost about $2400 so far.

There are pluses:

Due to the increase in the principal outstanding from PP, I expect to reap $000s if the PP loans live out their full terms and the borrowers do not fall into hard times.

Part of the these extras are already paid to me with the normal monthly/weekly repayments by the borrowers for the PP loans (and this is reported in the tax statement)

I will also get interest on the PP portion of higher outstanding principal in the monthly/weekly repayments (this is not in the tax statement and is too tedious to calculate)

So, overall I do believe HM's prediction that PP will add about 1% to our returns compared to non PP loans. Of course, HM will get more than us for every PP loans we sign up for but then so long as it benefits us in the end, all is good.

[myles]

Just so the numbers I gave before are meaningful - approximately 25% of my loans have Payment Protect.

I think my use of 'not a loss' before is just semantics, the key was the word 'rebalancing'.

[beacon]

Payment Protect? So far I've lost more to the net effect of payment protect payment waivers/lender rebates than I have from defaults. I'm now avoiding these loans after previously deciding to invest in them to avoid missing opportunities to invest.

PP is a complicated product, designed to increase Harmoney revenue substantially (at the cost of lender returns, due to early repaid). I have observed that PP loans are also much more likely to repay early than others. Harmoney have not cared to published examples of tax treatment of PP loans and affect of early repayment on PP loans, even though those scenarios have been worked out. There must be good (for Harmoney) reasons why those examples haven't seen sunlight to date...