The House Crowd has started phasing out self-select loans as it launches a new auto-invest model from today (15 January).
The peer-to-peer development and bridging lender said focusing on an auto-invest model would boost platform liquidity and improve the investor experience.
Under the new model, investors can choose from cautious, balanced and bold products targeting rates ranging between five and seven per cent.
They will receive regular interest payments twice a year and can reinvest their earnings.
Capital is spread across several loans and investors can request the return of all or part of their funds with 30 days’ notice under normal market conditions after investing for a 12-month term.
The platform said these changes will protect investors from cases where developments are delayed as they will no longer have to wait for a single property to be sold to recover their capital or be paid interest.
There is still an option to back self-select loans but this will be phased out later in the year.
Frazer Fearnhead (pictured), chief executive of The House Crowd, said further changes were planned in March which would provide more information on what is in each portfolio so investors can decide on that basis, similar to the self-select product.
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“People are always going to need accommodation,” he said.
“The portfolios will have a North West bias and target mid-range family homes.
“I appreciate the headline rate on a self-select loan may be higher but having more diversification is better in the long term.”