Peer to Peer Lending is an increasingly popular means of investing thanks to typically far higher returns than traditional or high street lenders provide. A typical return from a Peer to Peer platform today can be six to nine per cent - compared to a high street return of just 1-2%.
Peer to Peer finance lends itself especially well to investment for property deals. That’s because both sides can fully benefit. The property developers are able to receive the funding they need quicker than through traditional means and lenders are able to lend and earn interest on their investment through the course of the loan term.
How investors can benefit from Peer to Peer Lending
• Properties have already been sourced so all the investor has to do is provide the cash
• The returns are often higher than traditional investment options
• Property is a secured asset so that if, in the unlikely scenario anything went wrong, there is a way in which the platform can attempt to recover the funds.
• The Peer to Peer Lending process is extremely transparent i.e. an investor knows who is benefiting from the money he or she has put in
• A financial deal (or transaction) is conducted far quicker and smoother via Peer to Peer Lending than by traditional means
• Most Peer to Peer platforms use algorithms to offer investors bespoke deals of particular interest
• Peer to Peer Lending encourages portfolio diversification investors can invest in various different deals rather than ploughing a huge sum of money ‘into the one basket.’
Pros of Peer to Peer Lending
• All legitimate Peer to Peer Lending platforms are regulated by the Peer to Peer Financial Association (P2PFA)
• Credit checks must legally be carried out on all companies who receive funding
• Peer to Peer Lending is inclusive i.e. small and medium-sized companies can benefit and investors can invest smaller amounts to a variety of different projects over time.
• More Peer to Peer Lending platforms has meant increased competition (amongst the sector as well as high street lenders). The end result is better deals if you’re an investor
Cons of Peer to Peer Lending
• As with any form of lending, investor’s capital is at risk if the borrower is unable to repay the loan.
• Depending on the platform, your investment is potentially quite illiquid, meaning that you may not be able to quickly get your cash back if you need it. Although many platforms offer secondary markets to help investors with this.
• It’s still not recognised as a mainstream investment and borrowing tool - although every year the number of users increases substantially
It is still seen as risky - despite adhering to Financial Conduct authority rules.
Why invest in Peer to Peer deals with Sourced?
Peer to Peer Lending at Sourced involves investing in property - a secure backed asset. This means that should the deal fall through, Sourced will attempt to recover the investment by selling the property.
We offer a rate of return of up to 12%, with a maximum loan to value of 70%. This provides the lender with the opportunity to lend at risk adjusted rates on secured loans.
Our property experts are just that - experts; having spent decades in the industry. Our credit risk team carefully review each and every application, often meeting the applicant borrowers, and only those that meet our high credit risk criteria are listed for lenders. Our vast network of franchisees, with over 20 offices throughout the UK, means that we’re able to bring investors regular deals
Looking to get involved in Peer to Peer Lending? Then why not check out our own platform at www.sourced.co. Or, for more information, call us on 0333 123 1330.
Speak to Chris Richardson who specialises in investment property.
Call 0333 123 1330