What is Peer-to-Peer Lending?
Money invested via P2P platforms financed in excess of 1,000 residential & commercial developments in 2016, resulting in a nationwide market valuation of £1.15bn
What is Peer-to-Peer Lending?
Peer-to-peer lending, sometimes referred to as P2P investing, is the practice of one individual or business lending money to another. P2P investing is fully FCA regulated in the UK and, according to a recent study, money invested via peer-to-peer platforms helped to finance in excess of 1,000 residential and commercial developments in 2016, resulting in a nationwide market valuation of £1.15 billion.
If you’d like to know more before you dip your toes in the water, we’ve put together the following easy-to-read explanation of everything you need to know about peer-to-peer investing!
What is a peer-to-peer platform?
P2P platforms function as an intermediary between borrowers and lenders, bringing those in search of finance together with individual lenders. Most platforms exist solely online and take security in the form of various assets, such as property.
Why choose P2P over a traditional savings account?
Put simply, peer-to-peer investors are likely to receive higher interest rates than most high street savings accounts can offer. In part, this is because peer-to-peer platforms’ online presence means their overheads are lower.
How involved are the investors?
Each platform varies and platforms often have multiple products, which will each require a different level of investor participation. As an example, with Kuflink’s Select-Invest, investors choose individual deals they’d like to invest in, whereas the Auto-Invest product diversifies their investment, as well as their risk, over a variety of deals.
In both cases, all that’s left for the investor to do after their initial investment is sit back and watch the interest accrue. *
Are borrowers subject to credit checks?
Yes, and platforms should have their own procedures to complete this. Credit checks usually assess an applicant’s creditworthiness based on their credit history, income and other relevant factors. In comparison with securing a high street loan, borrowers may find that they are accepted for peer-to-peer finance with lower credit scores.
What are the risks?
As with any investment, there is a level of risk associated with P2P lending. The level of risk depends largely on the individual deal or platform terms.
Kuflink loans are all secured against UK property and regulated by the FCA. To date, more than £13 million has been invested through the platform and Kuflink’s investors have never lost a penny! What’s more, Kuflink invests up to 20% in every deal, minimising investors’ exposure to risk. *
If you’d like to learn more about how you can earn up to 7.2% interest pa gross with Kuflink, sign up to the online platform today! *
*Capital is at risk. Rate correct as of 31/01/2018. Past performance does not guarantee future returns. It is recommended that you seek independent financial advice.
What is an Innovative Finance ISA?
Innovative Finance ISAs (IF-ISA) are the most recent addition to the ISA family, introduced by the UK Government in 2016. IF-ISAs give savers the opportunity to use their tax-free ISA allowance to invest in peer-to-peer opportunities. IF-ISAs can offer much higher interest rates than many traditional Cash ISAs and their introduction builds upon the popularity of the peer-to-peer sector, through which more than £10 billion has already been invested in the UK.
What makes an IF-ISA different to a Cash ISA?
Many traditional Cash ISAs typically offer below 1% interest pa, whereas IF-ISAs can offer much larger returns. For example, Kuflink customers can earn up to 5.35% interest pa* – that’s more than 5 times the average!
How are funds in my IF-ISA invested?
Funds invested in an IF-ISA are used for peer-to-peer lending, but the exact nature of the opportunity varies from ISA to ISA. Kuflink invests your funds on your behalf across a diversified pool of UK property-backed deals, which also diversifies investors’ risk. *
How much can I invest?
Each tax year, HMRC set a tax-free personal savings allowance, which currently stands at £20,000 for 2017/18.
Can I transfer money from an existing ISA?
Yes, you can transfer your money from an existing Cash ISA, Stocks and Shares ISA or Innovative Finance ISA without losing your tax-free wrapper. Kuflink provides fee-free transfers into its IF-ISA, although other providers (including your existing ISA provider) may charge to transfer your money.
To find out how a Kuflink IF-ISA could earn you up to 5.35% interest pa*, download our free, easy-to-read infographic!
*Capital is at risk. Past returns are not a guarantee for future returns. Rate based on 5-year fixed-term investment. Investors are encouraged to seek independent financial advice.
P2P Property Report Highlights Key Market Trends
The Cambridge Centre for Alternative Finance has recently published its eagerly-awaited 4th Annual UK Alternative Finance Industry Report, offering a uniquely detailed insight into the ever-growing UK AltFi market. These 4 key points illustrate the current position of P2P property lending in the UK:
Peer-to-Peer Property Investment Grew By 88% Between 2015-16
Described as ‘one of the largest drivers of the UK’s alternative finance industry’, P2P property lending is now the third largest sector in the AltiFi market, just behind business lending and consumer lending. Money invested via peer-to-peer platforms helped to finance in excess of 1,000 residential and commercial developments in 2016 alone, resulting in a total £1.15 billion market valuation for the UK.
Kuflink’s sustained growth has mirrored this upward trajectory, with more than £12m invested through its p2p platform since it launched in August 2016.
Men Aged 55+ Continue To Dominate the P2P Investment Market
Most peer-to-peer investment opportunities are accessible to everyone (for example, Kuflink allows investors to get started from just £100) although this report shows that certain demographics are dominating the market. Findings include:
Gender split for P2P property lending is 16% female and 84% male. In terms of actual invested funds, the gender split is 25% female and 75% male.
Age spread between investors is heavily weighted towards over 55s, with 12% aged under 35, 31% aged between 35-54 and 57% aged 55+
70% of investors in P2P property-backed deals have an undergraduate degree or higher
35% of investors have an annual income of £50,000 or above
Risk Perception in the P2P Property Lending Market
In comparison with the wider alternative finance market, the industry report found that P2P property lending is perceived as less risky than cryptocurrencies, forex, stocks and shares. However, investors perceive it to be of equal risk to buy-to-let property.
Kuflink strives to instil confidence in our opportunities, which is why we co-invest up to 20% alongside our community of investors in every deal!
Investor Preferences Are Evident for Peer-to-Peer Platforms
Research shows that when it comes to choosing peer-to-peer property deals, investors have very strong preferences. The most important investor needs were control, diversification and interest rates, and the report found that:
88% of investors prefer to control where their money goes and for how long
Kuflink’s Select-Invest offers a variety of property-backed deals with varying terms and gross annual interest of up to 7.2%*
88% of investors like to diversify their portfolio
Kuflink’s investors can choose to diversify their investment themselves with Select-Invest, or let Kuflink automatically diversify their portfolio, and their risk, with Auto-Invest or our IF-ISA.
90% of investors are influenced by available interest rates
Kuflink investors can earn up to 7.2% interest pa gross*, depending primarily on the level of risk associated with each opportunity.
Source: Cambridge Centre for Alternative Finance, 4th Annual UK Alternative Finance Industry Report
Sign up here to take a look at the peer-to-peer investment opportunities we have available.
*Capital is at risk. Rate correct as of 21/12/2017. Past performance is not necessarily a guide to future returns. Independent financial advice is recommended.
2018: The Year of the IF-ISA
You could be earning up to 5.35% interest pa* with an Innovative Finance ISA; the latest addition to the ISA family and a growing financial trend for 2018!
With bank rates at a constant low and inflation rising, your money could, in real terms, be losing value in a traditional savings account. If you are keen to earn a fantastic rate of interest from your savings this year, then an Innovative Finance ISA could be exactly what you’ve been looking for. Furthermore, with industry experts forecasting IF-ISAs to take off in 2018, there has never been a more opportune moment to consider alternative ways to earn a better return on your money. Don’t let your financial goals be among the 80% of New Year’s resolutions which are broken within the first 6 weeks!
What is an Innovative Finance ISA?
An Innovative Finance ISA (IF-ISA) is the most recent addition to the ISA family, introduced by the UK Government in 2016, giving you the opportunity to use your £20,000 annual ISA allowance† to invest in peer-to-peer opportunities with the added benefit of tax-free interest.* IF-ISAs can offer much higher interest rates than many traditional Cash ISAs and their introduction builds upon the popularity of the peer-to-peer sector, through which more than £10 billion has already been invested in the UK.
How are IF-ISAs different to traditional ISAs?
Many traditional ISAs typically offer below 1% interest pa, whereas IF-ISAs can offer much larger returns. For example, Kuflink’s customers earn up to 5.35% interest pa* – that’s more than 5 times the average! Funds you invest in an IF-ISA count towards your £20,000 per annum tax-free savings allowance. †
What are the key features of Kuflink’s IF-ISA?
As well as offering a higher rate of interest than traditional Cash ISAs, Kuflink’s IF-ISA provides a hassle-free way to make your money work harder for you:
Invest up to £20,000 pa tax free†
Invest from just £100
Invest for either 1, 3 or 5 years
Earn a fixed rate of interest up to 5.35% pa* depending on the term you choose
Transfer funds from your existing ISA provider for free**
No account management fees
We automatically diversify your investment, and your risk, across a portfolio of loans, generating interest from day one
Secured against bricks and mortar
Read more about Kuflink’s IF-ISA here
How does Kuflink’s IF-ISA allow you to benefit from house price growth?
Property experts are forecasting that UK house prices will rise by 13% in the next 5 years
Many believe that rising house prices only benefit property developers and landlords, but the continued growth of the UK property and rental markets provides security for Kuflink investors too! Funds invested in our IF-ISA are automatically diversified against various UK property-backed loans. As well as increasing the value of your investment backing, market growth helps to sustain a diverse portfolio of opportunities to suit our varied investor preferences.
At Kuflink, one of our top commitments for the New Year is to maintain that our investors have never lost a penny! Since our launch in August 2016 more than £11 million has been invested through our platform and more than 10,500 investments have been made, each resulting in solid returns for our investors.§
To earn up to 5.35% pa* register for a Kuflink IF-ISA today and ensure your 2018 gets off to a fantastic start.
*Capital is at risk. Rate based on 5-year fixed-term investment.
†Annual allowance set by HMRC for the 17/18 tax year
**Subject to exit fees from your existing ISA provider
§Past returns do not guarantee future returns. Investors are encouraged to seek independent financial advice.
Bridging market: Six predictions for 2018
“The bridging market is coming off a hugely successful 2017 and pipeline business going into January is the best that we at Kuflink have ever seen.
Housing and bridging will be boosted by Cabinet reshuffle, say Kuflink
Kuflink Bridging say it is ‘looking forward to increasing business volumes’ as the demand for short term lending has grown significantly over the past twelve months.
Kuflink Bridging joins Bridging Loan Directory
Kuflink Bridging has this week become the latest bridging finance provider to join the Bridging Loan Directory. Founded in 2011 as Alpha Bridging Solutions, they re-branded to Kuflink Bridging in 2016.
