LOANPAD has launched the UK’s first hybrid peer-to-peer platform, which offers lower-risk investments on secured property loans.
The platform’s lending model allows investors to share loans with established property lenders. These property lenders fund the higher-risk part of each loan, earning a higher rate of interest. The platform’s retail investors will only ever invest in the lower-risk parts of the loans.
Read more: Reducing risk
“We wanted our model to give everyday investors access to a premier lending experience,” said Louis Schwartz (pictured), Loanpad’s founder and chief executive. “By partnering with lending partners who originate our loans, we’re able to offer greater security than a typical property loan.
“As a Loanpad investor, you only fund the lower-risk senior part of the loan, while the lending partners fund the junior part and retain the first loss position. So if a loan goes bad, their investment suffers a complete loss before investors are affected.”
Loanpad offers two types of account – a classic account, which gives investors daily access to their money and can be managed free of charge; and a premium account which offers a higher interest rate with a 60-day notice period for free withdrawals, or a small charge for early access. Both accounts can be held within Loanpad’s flexible Innovative Finance ISA, and the accounts can be opened with as little as £10.
Schwartz said that the structure of the accounts is intended to mirror the “usability” of a bank account but with inflation-beating returns, although capital is at risk as there is no FSCS protection.
“Every aspect of the model is laser focused on protecting our investors’ money as much as we can,” added Schwartz. “We only take on carefully vetted lower-risk property loans, originated by experienced lending partners; investments are diversified across our entire portfolio of loans which helps reduce the impact of any one borrower defaulting; interest is paid daily and access to money is free every day with our Classic account.
“Of course, no lending account is completely risk-free, but Loanpad is built to keep the risk to people’s money as low as possible.”
The platform is fully authorised and regulated by the Financial Conduct Authority.