Lending Works is on online P2P platform. They offer unsecured personal loans at competitive rates, financed by individual lenders (consumer 87.3%, institutional 12.7% as of December 2017). Lending Works launched in 2014 operating out of an office in London and their total loans now amount £85’000’000 to date.
Funds can be deposited either by debit card (1 day clearance) or bank transfer (2-3 days). There are two rates of return on the Lending Works platform, either 4% for 3 years or 5.5% up to 5 years (correct as of December 2017). The projected rates can change with a weeks notice at the desecration of Lending Works.
The minimum you can deposit at any one time is £10. Interest earned on your ‘On Loan’ balance is paid out on the last day of the month. This balance will either go in to the ‘Classic Wallet’ for withdrawal or ‘Offers’ for re-lending as per your instruction.
You will notice there is a residual balance in the ‘Classic Wallet’, in this case £0.09. This is because unlike some platforms you can not manually choose which individual loans to invest in, Lending Works dose it for you. So the loans are broken down in to micro loan parts ( in the region of £0.85 ) so you are usually left with a few pennies waiting for further funds before being loaned out. One advantage of this is risk can be spread very wide, even with a relatively small balance. This insulates from most bad debts of defaults.
Lending Works also operates a provision fund that it calls the ‘Barrier’ to further insulate a lender from bad debts or defaults. This platform also operates a withdraw charge (on quick withdraws) of £20 or 0.6% of the balance, which ever is higher, designed to enforce stability of funds, this charge puts Lending Works straight in to the mid term investment prospect (2 – 5 years) before realising a profit. The only way to avoid this charge is to use the option to auto-withdraw monthly returns (for which there is no charge), this however means sacrificing compound growth.
The Lending Works dashboard
The dashboard for Lending Works is very simple to understand –
Classic Wallet – is the balance in your account unassigned to loans (this amount is available for withdrawal at any time).
Offers – is any balance you have instructed to lend out but has not yet been assigned to a loan. Loan assignments can take 5 to 10 working days depending on availability, and you do not earn interest on the offer balance.
On Loan – is the balance you have successfully lent out to borrowers. This balance is where the interest is earned.
Withdrawn – details all your withdrawals made from your account to date.
My repayments – shows the instruction you have given Lending Works regarding what to do with your repayments. You can either return them to your classic wallet for withdrawal or auto invest to maximise returns.
Landbay is a peer-to-peer lending platform specialising in the UK buy to let property mortgage market. Landbay was established in 2013 in response to the resilience in the UK buy to let market thought the 2008 downturn despite property values dropping by 17%. Landbay is partnered with Zoopla (the UK’s biggest estate agent) so is considered to be well backed and relatively safe.
Investments on this platform are initially queued to await assignment to a suitable investment. However interest is paid on deposits (this has currently been suspended as of April 2017 due to excessive demand) even while in the investment que. Loan terms can be for as longs as 10 years on this platform.
Landbay’s minimum account deposit is £100 which can be invested in one of two options. Land Bay also operates a secondary market for an early investor exit option. You are also able to ‘Auto Invest’ interest earned to maximise returns.
The options LandBay currently offer –
Options are either a fixed rate of 3.69% ROI fixed for 5 years. Or at a tracker rate of 3.00% (plus LIBOR) ROI (Correct of April 2017).
The LandBay account dashboard –
The dashboard is very simple for Landbay –
Cash balance – shows any funds on the platform that are not currently invested or queued for investment. You are free to withdraw any funds at any time in the cash balance.
Invested funds – this shows all your invested funds assigned to loan parts. It also shows funds that are queued and awaiting assignment to loan parts. There is currently an estimated 2 month waiting list for loan assignment (correct as of April 2017) due to excessive demand.
Lifetime Interest – shows the total earned interest over the life of the account. This is also where you can access your statements.
With investments still queued for investment information on this platform will remain sparse, but more information will be added once the investments become active.
Funding Circle is a peer-to-peer lending platform, who established its UK operations in 2010, although it operates in 4 countries worldwide. The Funding Circle platform offers finance exclusively (as of spring 2017 Funding Circle dose not cater for property ) to businesses for growth and expansion, working capital loans or commercial development.
Funding Circle has an advertised average return of 6.5% ROI after bad debts and charges. This platform also operates a secondary market allowing investors to sell loan parts before term if an investor feels they need an early exit. Secondary loan part sales are subject to buyers being available in the market at the time, so this offers no guarantees of succesful loan part sales when an investor may need them. As of autumn 2017 you can no longer manually choose which loans to invest in, you can either invest in a ‘balanced’ (7.5% projected return) portfolio, of a ‘conservative’ (4.8% projected return) portfolio which the platform will then auto diversifies your funds accordingly. You can still sell part or all of your investment based on secondary market demand.
The minimum account deposit for Funding Circle is £100, with a minimum loan part set at £20. Loan terms are usually between 6 months and 5 years. The platform charges investors in two areas, a 1% (of the loan part value) annual service charge and a 0.25% transaction charge when selling loan parts on the secondary market.
The summary account page.
This is what the main account summary page looks like for Funding Circle. It’s very straight forward to understand. The top left box shows your totals in percentages –
Gross yield – refers to your average maximum advertised return across all your current invested loan parts.
Annualised Return – this is your actual annual ROI on all current invested loan parts added to your completed investments in the financial year. The figure also subtracts Funding Circle transaction fees and bad debts incurred.
Estimated fully diversified return – this is your estimated return over all current loan part investments, subtracting Funding Circle transaction fees and bad debts.
The bottom left box shows your all time earnings summary –
Earnings – shows your total paid (interest is only paid the same day each month you first invest in the loan part) return over the life time of the account (note: this is a grand total and is not broken down in to tax years, you will need to either work that out yourself when it comes time to pay your taxes, or a separate tax statement is available to account holders). Earnings are broken down in to four categories, interest, loan part sales, loan part purchases and promotions. These can been seen by clicking the ‘blue plus’ button next to ‘earnings’.
Fees – are Funding Circle’s annual service charge incurred. The service charge is set at 1% of the value of the loan part calculated over an annual term. In addition Funding circle also charge a transaction fee of 0.25% of the loan part value when selling loans on the secondary market.
Losses – show any bad debts you may have occurred. Losses are also broken down in to bad debts minus recoveries of the bad debt, this can be seen by clicking the ‘blue plus’ button next to ‘losses’.
Net earnings – is the sum of your earnings minus fees and losses.
The box on the right of the screen shows your funds summary –
Funding Circle total – is you total account balance on the Funding Circle platform. This includes any loan parts you are invested in as well as any balance you currently do not have invested in any loan parts.
Accrued interest – is any interest gained by your investments that has not yet been paid in to your account balance (accrued interest can not be withdrawn from the platform until it is paid at the end of the month).
The pie chart– is made up of 3 components; the blue section shows any funds put to a loan part but not yet accepted by the borrower; the green shows any funds accepted and is actively attributed to loan parts. There is also a grey section showing any funds on the account platform that are ‘idle’ or unassigned, this includes interest paid at the end of each month.
Lendy started life in 2012 but operated as the Saving Stream peer-to-peer leading platform until spring 2017 before reverting back to the Lendy name. Lendy operates exclusively in the UK real estate market by providing loans to both existing property purchases and new property development’s.
The platform offers property backed investments lent at no higher than 70% of the property value. The investor is free to choose from a variety of property providing there are loan parts available to purchase at the time of browsing. Interest is earned daily but paid monthly (first day of the month) on active investments.
There is no minimum account deposit or withdrawal for Lendy, with average advertised annualised return of 12% per annum (Rates can vary across properties). Loans tend to be for 6 month terms. An investor can either reinvest monthly interest or withdraw it. Lendy also operates a secondary market place to allow investors an early exit option if needed. All properties available for investment on this platform include an investment pack detailing everything you need to know about the loan arrangement, including intended use of borrowed capital; schedule of capital delivery; due diligence; surveyor reports; independent property valuation reports and much more.
The property investment page
The main page for the Lendy platform displays a list of properties currently available to invest in. Information displayed is as follows –
DFL013 – Is a unique reference number given to each property used for a quick reference when referring to a specific property.
Richmond Road, Bradford – This is the location of the property.
13/01/2017 – This is the date of the start of the loan agreed between the borrower and Lendy. This does not change even if the repayment schedule is restructured.
The photograph – Shows the property described.
Loan – The total value of the loan agreed between the borrower and Lendy.
Loan to value – This is the percentage value of the loan against the independent valuation of the property or development. Lendy will lend to a maximum security of 70% against the property value to accommodate market pressures or potential default and recovery proceedings.
Amount available – This is the current amount available to an investor. If a loan is fully invested in at any given time it will not appear on the investment page by default. Loans can become available again if another investor decides to sell their loan part on whats known as the secondary market. In fact most of what you see on investment page is actually secondary loan part sales. New properties (primary’s) tend to snapped up quite fast in the first instance.
The account page
Balance – This is the total amount of money you currently have on the platform. The figure is made up of funds deposited, plus funds invested, plus interest earned from previous months (does not include the current part month interest until its paid out on the first day of the month) minus any losses through defaults.
Live loan parts – Shows how much you currently have invested in live loans.
Available funds – Is any money in your account not currently invested in a loan part. When interest is paid at the end of the month it will show as available funds, until you either reinvest it of withdraw it in to your bank account.
Export to Excel – A handy little button that allows you to download all your account figures in to an excel document, handy for record keeping and tax calculating.
Drawdown – This quite simply means the borrower has started to access and spend the money they have borrowed, meaning the loan is active and investors interest will be calculated at the rate as outlined in the investment pack. It is not uncommon for larger loans to be broken down in to smaller development tranches, with the borrower required to achieve defined milestones before the release of the next wave of funds. This is mealy an additional security measure designed to limit the impact of a potential default. Details of such arrangements can be found in the investor pack attached to the property.
Remaining – This shows in days the time left on the original loan agreement. The common loan term for Lendy is 6 months but can vary as agreed in the terms of the loan between Lendy and the borrower. If the remaining time is show as a negative number this means the original repayment deadline has elapsed. This does not necessarily mean the loan has defaulted. It usually means the terms have been adjusted, so repayment may take longer than originally expected, however interest will still be paid to investors every time the borrow makes a repayment. Specific details of the loan progress can be found in the investment pack and are also summarised in a weekly email to all investors on the platform. Total default and recovery proceedings are a last resort following exhaustive renegotiation and repayment restructurings.
Amount – This column indicates the amount of money you currently have invested in any single investment. There is no minimum amount you need to invest meaning you can directly reinvest all of your monthly interest if you like, maximizing your returns.
Interest – This is the total amount of interest earned on each loan part to date. The amount will include any interest gained in the month but not paid (at the end of the month). It’s also worth noting that this shows the total interest earned for the duration you have been invested in that loan part ie. if you have been invested for two months it will show the total for the two months not just the amount for the current month.
The secondary market
The Lendy platform operates what is known as a secondary market. This is essentially an early exit option for an investor if they need to release invested capital before the end of the loan term. How this works is actually quite simple.
Find the loan part you want to sell from the list on your account page, click on it and click on ‘sell loan part’. It will take you to a page detailing the property, scroll down and you will see the box show in the picture above. You can sell all or a portion of the loan part by using the slider or typing an amount in to the box. The ‘sale queue’ on the example above is £97,193.13 . This means if the loan part was to be put up for sale it would have to wait for the queued balance to be sold first. The flip side of sale que is the value available for investment of that property shown on the property investment page at that given time.
As soon as a loan part is queued for sale it will no longer gain interest. If you were to cancel the sale of the loan part it will return to earning interest. There are no transaction charges involved with either selling or canceling sales of loan parts on the Lendy platform. It’s worth noting that the secondary market is still a marketplace requiring demand for loan parts being sold, if there is low demand it will take much longer for the sale que and then your loan part to be sold. So the balance between offloading investments and loosing potential interest is something of a personal preference and will probably take a bit of experimenting to work out whats best for you.
PropTech is short for Property Technology. This term casts a wide net over a number of areas but can defined by any technology developed to assist in the purchase, leasing or marketing of property. With-in the PropTech sector a number of platforms have sprung up in recent years allowing the small fish investor (like me) to easily invest small amounts in property transactions in exchange for a reasonable return. We all know UK banks are currently delivering pitiful returns on savings accounts at this time so its good to know there are alternatives.
Of course its has to be said any money invested in these platforms is at risk like any other investment, so be aware you can walk away with less than you started with if a borrower hits choppy waters and starts to default on repayments. I would suggest reading as much as possible on your chosen platform and more generally about the sector so your eyes are open before making any commitments.