P2P Investors: How rollover loans work with your investment

Financial planning Written by Squirrel, Aug 5 2019

We’ve started seeing our first group of Homeowner's loans roll onto principal and interest after their initial 12-month term on interest only. For those of you not familiar with the investment proposition for the Homeowner's loan, here are the basics:

  • Investments made into this product are for an initial term of 12-months with an interest-only return of 6.0%*;
  • After that term expires, the loan will roll on to principal and interest for a default term of 5 years.
  • Near the end of the initial 12-month period, each investor in the original interest-only loan is given the opportunity to retain their investment(s) in the loan by cancelling the automatic sell order on those investment(s);
  • If the investor cancels the sell order and chooses to retain their investment(s) in the loan, a new set of investments is created for that investor into the new 5-year amortising loan and the investor will receive a return of 8.0%* on those investments;
  • If the investor does nothing, their investment(s) in that loan will automatically be put up for sale on our secondary market at the end of the initial 12-month term;
    • Assuming another investor is willing to pick up the investment(s) being sold, the investment(s) will then be sold;
    • The original investor’s principal will be returned with the new investor picking up a 5-year investment with a return of 8.0%* per annum;
    • No sell investment fees will be charged to the original investor for this sale process;
    • The original investor(s) will remain with the new 5-year amortising loan until their investment(s) can be sold on the secondary market.

So, if you’re looking for a way to invest your funds into a longer term investment at a great rate, simply cancel the automatic sell orders on your interest only investments when those emails come through. 

*Rates quoted were current at the time of writing, all rates subject to change and should be reviewed at the time of initial investment.

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