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 Peer2Peer platform today can be six to nine per cent – compared to a high street return of just one to two percent.
Peer to Peer finance lends itself especially well to investment for property deals. That’s because both sides can fully benefit. The lender receives all of their investment plus interest at the end of an agreed project, while the property developer receives the cash he or she needs to carry out their project.
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 far higher than anything the high street can offer
• The investment itself is hands-off
• Property is a secured asset so that if, in the unlikely scenario anything went wrong, an investor would still receive the money they had invested
• 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 2 Peer Lending platforms are regulated by the Peer 2 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 don’t have to hand-over huge sums of money at once
• 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
It’s still not recognised as a mainstream investment and borrowing tool – although every year the number of users increases substantially
• More educating the public as to the advantages of Peer to Peer Lending is certainly necessary
• It is still seen as risky – despite adhering to Financial Conduct
Authority rules and having a ‘buffer’ fund to pay investors first should a deal fall through (which is very unlikely)
Why invest in Peer to Peer deals with Sourced?
Peer 2 Peer Lending at Sourced involves investing in property – a secure backed asset. This means that should the deal fall through the property will be sold to pay off the investor. Lending is usually for a period of six to 12 months and the investor is always paid first at a project’s end.
Our rate of return is up to 12 per cent, with a maximum loan to value of 70 per cent. This far outstrips High Street Lending and also that of many other Peer to Peer Lending platforms.
Our property experts are just that – experts; having spent decades in the industry. They can spot a poor deal a mile away and they are well-versed in what’s required when it comes to due diligence. We also have a huge network, with more than 20 offices throughout the UK. This makes the opportunity of a face-to-face chat very likely.
Looking to get involved in Peer to Peer Lending? Then why not check out our own platform at www.sourcedcapital.co. Or, for more information, call us on 0333 9009 999.
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With an IFISA, you can invest in what’s called “innovative finance”, to benefit from tax-free returns. Download to learn more about investing with a Sourced Capital IFISA.