Short Term Peer To Peer Lending

An ideal investment is the one that yields a high interest rate over a short space of time. Unfortunately, these investment options are not exactly a dime a dozen. Traditional investments, even something as simple as an ISA, often force people to commit their money over a long period of time to generate a significant return. What’s more, while some of these investments are tax-free, they are not always risk-free. This is ultimately why short term peer to peer lending, using property as security, is a very attractive investment option. Unlike with traditional property crowdfunding, you don’t need to wait for the majority of investors to decide to sell in order to exit the investment.

Peer To Peer Lending And The Property Market

We enable you to make short term loans directly to property owners, with your money secured by the underlying value of the borrowers’ properties. The borrowers commit to paying a higher rate of interest in order to access the funds at short notice, which enhances returns. By acting as an intermediary between borrowers and investors, we cut out traditional institutional lenders like banks. This enables you, as the investor, to earn fixed returns that are generally much higher than you would normally receive. Should the borrower default on the loan, we can take legal possession of the property, or force a sale, to recover your money and any interest owed. Your investment is secure because we only accept loans up to 75% of the asset’s value – in other words, how much the loan is worth against the resale value of the property or Loan to Value (LTV). For example, we would never loan more than £750,000 on a property valued at £1,000,000. This provides you with a decent sized cushion in the event that the borrower defaults and the property must be sold quickly at a discount - or the market drops for some reason during the loan period. Our team performs in-depth due diligence on all loan applications. We do a thorough security check on the borrower’s background, including an independent valuation report obtained by a RICS qualified surveyor. This helps to ensure we only work with legitimate investment opportunities.

Benefits Of Short Term P2P Lending

It’s quick and easy to get started with a short term P2P investment. For one, you bypass all institutional lenders and lend directly to the borrower. You can start investing with a minimum of just £1,000 with returns fixed at between 8-10% p.a. net. What’s more, typical loan periods are six to 12 months, which means your money is not tied up for a long time – and you see significant returns quickly. What’s more, short term peer to peer lending is flexible and in certain scenarios, the loan periods can be reduced even further. Unlike with equity crowdfunding, where profit and loss are shared proportionately among investors, short term peer to peer lending doesn’t tie you into a property with lots of other investors. In other words, you experience both profit (and possible loss) as an individual. The loans are also structured in such a way to maximise the amount of interest that we can pay. Happily, this means that you pay no fees on your returns – you receive the full amount. You also have complete peace of mind in the knowledge that the underlying value of the borrower’s property protects your investment.

How We Work

When we launched The House Crowd in 2011, it was the first property crowdfunding platform in the world. We have offered peer to peer secured lending since 2015. We are FCA accredited to provide P2P secured lending. This ensures a high level of transparency and a legal obligation to be upfront about all risks involved in P2P investing. To date, we have raised £70m for developers and businesses, and have never lost a penny. Our bridging finance team have experienced ‘bad debt’ on a few occasions, but no capital has ever been lost. Any ‘late’ redemption of loans is only late with our consent.