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Our pick of the best P2P loans  This post is part of a regular series where we highlight what we think are some of the best P2P loans available in the UK and Europe. These loans may sell out very quickly. Even if they do, it is likely that similar opportunities are available on each platform. Our goal is to help highlight the types of opportunities that are available on various platforms, and which types of loans offer the best balance of risk and reward. Description Why we like it Link Interest rate: 10% LTV: 26% Term: 43 months 1st lien mortgage SOFIA, Bulgaria Buyback guarantee     This mortgage loan is available on Viventor. We think this loan in particular is interesting because it offers both a very low LTV of 26%, and a ‘buyback guarantee’ from the lender Lenno. We continue to think that the Lenno loans are the top picks on Viventor right now. Investors get the benefit of the loan collateral and also a buyback guarantee, which is rare. Lenno received one of the highest scores in our recent Viventor lender ratings. One final positive characteristic of this loan is the payment history of the borrower. The loan was originated 17 months ago and in that time they have made all their monthly payments and paid down the loan principal by more than 20%. Loan 255977 Interest rate: 14%  LTV: 68% Term: 42 months CAR LOAN BUYBACK GUARANTEE ROMANIA We think that Mogo loans offer some of the best value on Mintos currently. Interest rates had been as low as 10% not too long ago but now loans like this can be found at 14%. We think that is a very strong yield given that Mogo’s corporate bonds trade at a yield of around 10% at the moment, and the Mintos loans have the additional benefit that they are directly secured on loans that have cars as direct loan collateral (as well as a buyback guarantee). We also like loans that have a strong payment history, and this borrower has already made 15 consecutive monthly payments.  Loan 17202577-01 Interest rate: 15%  LTV: 59% Term: 12 Months First Lien mortgage LATVIA   Sometimes we highlight here loans that sold out almost instantly when they went live. We do this to highlight the types of opportunities that are available on certain sites that can offer good opportunities, but require you to be quick to receive an allocation.  This is one of those types of loans. The security for the loan is two decent quality properties located in Latvia. Bulkestate always uses well known, reputable valuation firms and usually has conservative LTVs. This is a good example of what can be found on Bulkestate – a high yield of 15%, a conservative LTV at 59%, and a fairly short duration of 12 months. We think that is a pretty strong combination. Bulkestate has also been increasing the availability of loans recently, so it is worth opening an account and waiting for good deals like this to come along. 'Briezu' loan Interest rate: 11%  LTV: 47% Term: 18 Months First Lien mortgage ESTONIA   This loan from Estateguru is secured on a boutique hotel and restaurant located in a national park near Tallinn, Estonia. Estateguru reports that is has high occupancy and we can see that it has many customer reviews, with overall good ratings on the site Booking.com. We often dislike loans secured on commercial property as they can be difficult to value and assess the potential demand if the collateral is foreclosed. However we are relatively comfortable with assets like this, which we believe are not too difficult to value accurately and where there would be good demand if it were put up for sale. At a 47% LTV, and an 11% interest rate, it represents a good yield for fairly modest risk. Loan 6552 Interest rate: 7%  LTV: 25-40% Tranche Term: 12 Months First Lien mortgage, Tranche 2 London, England   We don’t normally like loans that are secured on high value residential real estate. They can be less liquid, and more difficult to value. However, this property (£2.1m valuation) is located in Maidenhead (near Heathrow, London) and the area is going to benefit from a new Crossrail trainline into central London that opens soon. This property also has a river-front location with a boat mooring which makes it very attractive to potential buyers. This loan has been tranched by Kuflink and we think Tranche 2, with an LTV range of 25-40% and an interest rate of 7% is the most interesting one. Kuflink also provides a 5% additional ‘first loss’ protection on this loan, which should make it ‘Brexit-proof’ unless things get very, very bad….   'Dorney Reach' Loan ..read more
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Our pick of the best P2P loans  This post is part of a regular series where we highlight what we think are some of the best P2P loans available in the UK and Europe. These loans may sell out very quickly. Even if they do, it is likely that similar opportunities are available on each platform.Our goal is to help highlight the types of opportunities that are available on various platforms, and which types of loans offer the best balance of risk and reward. Description Why we like it Link Interest rate: 17%LTV: 62%Term: 10 months1st lien mortgageRIGA, latvia Wow. 17% interest is the highest interest rate we have seen this year on a secured property loan in Europe. This is also the biggest loan that BulkEstate has had on its platform so far. This looks like an interesting deal. It is secured on real estate in a central location in Riga, Latvia. The borrower plans to do some light renovations and then sell the apartments individually. This is a relatively low risk type of development, and the renovation works will add value to the collateral. The  low LTV of only 62%, and first lien ranking of the loan further reduces the risk.  Loan Marijas Interest rate: 10%LTV: 19%Term: 46 months1st lien mortgageProvdiv, BulgariaBuyback guarantee   This mortgage loan is available on Viventor. It is the first time we have included a Viventor loan  in our ‘loans we love’ series. We think this loan in particular is interesting because it offers both a very low LTV of 19%, and a ‘buyback guarantee’ from the lender Lenno. It’s quite unusual for investors to benefit from a buyback guarantee on a secured loan like this. Lenno received one of the highest scores in our recent Viventor lender ratings. One final positive characteristic of this loan is the payment history of the borrower. The loan was originated 15 months ago and in that time they have made all their monthly payments and paid down the loan principal by more than 20%. Loan 245238 Interest rate: 15-17%Unsecured‘B’ Grade loansTerm: 48-60 monthsLithuania Finbee is a small P2P investment site based in Lithuania. It has been growing however and have received some good reports from investors. The key thing about Finbee is that unlike many P2P investment sites, the loans come without a buyback guarantee. That tends to mean returns can be higher, but there is more potential risk. That makes it important to diversify, and to expect some loans to go bad. We have obtained from Finbee management some data on historic default rates (90+ days in arrears) by year and by risk grade (available here). To us, the B grade consumer loans look particularly interesting based on this data. They have had consistent default rates of around 2-3%. Interest rates of 15-17% can be found, which looks attractive compared to the default rate history of these loans. Loan 'Ausra83' Interest rate: 12.5% Term: 3 monthsPersonal loanIndonesia Many of our readers have an account with European site Mintos, and we constantly look for loans that offer a good balance between lender quality and return. Kredit Pintar is the most recent lender to join Mintos. It is based in Indonesia, and is strongly profitable. It has also been backed by several leading investors and has a very strong balance sheet currently.  It received an initial score of 66 in our Mintos lender ratings. Loans like this can be fund on the primary market currently at a yield of 12.5%, which we think is a good return for the risk. These loans also provide some geographical diversification, as many Mintos lenders are based in Central and Eastern Europe. Loan 15685230-01 Interest rate: 6.7% LTV: 63%Term: 5 MonthsFirst Lien mortgageLondon, England  Last month we highlighted a loan from Kuflink as one that we didn’t love. That was a second lien loan with a 75% LTV and over-valued collateral. This loan from Kuflink shows how much better loans can be found on this site if you are patient. For a similar interest rate, this loan is a first lien loan, and has a lower LTV of 63%. The borrower has recently purchased the property (located in London), so the recent valuation of the property is known. The borrower is seeking a change of licence for the property, and this loan will be refinanced once this is received. We like loans like this because they are boring, easy to understand, and the risks are limited. 'The Drive' loan ..read more
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Our pick of the best P2P loans  This post is part of a regular series where we highlight what we think are some of the best P2P loans available in the UK and Europe. These loans may sell out very quickly. Even if they do, it is likely that similar opportunities are available on each platform.Our goal is to help highlight the types of opportunities that are available on various platforms, and which types of loans offer the best balance of risk and reward. Description Why we like it Link Interest rate: 11% Term: 24 monthsPersonal loanlatvia Many of our readers have an account with European site Mintos, and we constantly look for loans that offer a good balance between lender quality and return. Banknote announced excellent results for 2018 recently, which led us to give them a rating upgrade. The company is very profitable and has strong levels of capital. Loans like this can be fund on the primary market at a yield of 11%, which we think is a good return for the risk.  Loan 12103693-01 Interest rate: 10.2%LTV: 66%Term: 12 months2nd lien mortgageEngland This is a boring loan, secured on a really, really boring property. But that’s why we like it. We think that when it comes to P2P investing, boring loans, with boring results, are ideal. This loan sold out very quickly but we have included it in our list to show the types of loans that Bridgecrowd offer, which we are fans of. While some Bridgecrowd loans get repaid early, and some get extended, none of their loans have ever generated a loss for their investors, even when properties have been repossessed and sold. A return of over 10%, for an LTV loan of only 66%, makes this loan attractive in our view. This property is also being renovated by a professional developer, which will make the collateral more attractive, and add value. If this type of loan is appealing, you will need to register as an investor and act quickly once new loans are released, as the demand is very high.  The one downside of Bridgecrowd is that the minimum investment in each loan is £5,000, so it suits investors with larger sums available to invest. 'Copperleaf gardens' loan Interest rate: 11.5%LTV: 73%Term: 24 months2nd lien mortgageRIGA, latvia This loan from Estateguru is secured on 3 apartments inside an extremely beautiful classic building located in the heart of Riga, Latvia. Yes, it’s a 2nd lien loan, and yes the LTV is a little higher than normal at 73%. However it’s important to go beyond just looking at metrics like LTV when assessing loans like this. Firstly, it is quite easy to value properties located in central areas like this, so investors can have more certainty about valuation than properties located in more remote locations that can be difficult to value accurately. It will also be very easy to sell these apartments if the borrower defaults. Secondly, the borrower is using the funds to help complete a renovation of the apartments that is currently underway. That will add value to the properties, and the renovation photos provided by Estateguru show it is being performed to a high standard. Finally, the borrower has a good track record – they have now fully repaid four other loans on Estateguru. Taking all these factors above into consideration, we think 11.5% is an attractive return. Loan #7331 Interest rate: 11%LTGDV: 44%Term: 20 months1st lien mortgageNorwich, England  This is another loan that sold out almost immediately but we wanted to highlight as being a great quality loan. It comes from Blend Network, a small but interesting British P2P site (our interview with CEO here). Why do we like it? Firstly again the quality of collateral is good. It is located in a quiet but central location in Norwich, England that is popular for tourists. Three experienced developers are planning to convert a guest house into serviced apartments and a commercial unit. The guest house has received good ratings online (4.6/5), with guests liking the location and size of rooms in particular. This development makes sense to us and it seems like a fairly low risk development to execute successfully. We also like the low LTGDV of 44% and that all three developers have provided personal guarantees. An 11% return represents a good return relative to the risk on this loan, and we are not surprised it sold out fast. If this type of opportunity is potentially of interest to you, we recommend registering with Blend and then being ready when each loan becomes available, as the demand is very high. 'Colegate' loan And here are two we DON'T love right now.... Interest rate: 18% Term: 2 yearsbusiness loanLatvia  This loan, offered by new P2P site Kuetzal, is to the ‘European Crypto-Mining Association’. It’s hard to know where to even start when analysing this loan. Is crypto-mining really still a thing? Is it profitable? Does it make sense to do it in Latvia? How risky is it? What happens if crypto values continue to head towards zero? Does the company even really do half the things it claims to do? We don’t really know. In fact Kuetzal doesn’t provide even any of the basics like what assets the company has, how it is being funded, and whether it is making or losing money. If you like to take big risks, we suggest visiting the casino rather than investing in this loan. Your odds are probably better there. ..read more
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Loanpad is a new British P2P site. It offers cleverly structured, lower risk investments The British P2P market is the largest and most sophisticated in the world. Dozens of investment sites have already been established. New sites that launch face a lot of competition to attract new investors. To succeed, they have to offer something a bit different.  Loanpad, which has just launched, has achieved this differentiation. We think it has the potential to be successful.Loanpad’s P2P investment products are unique and offers some features that many investors will find attractive. Loanpad sources its loans from specialist property lenders. All loans are secured on residential and commercial property. When the lenders sell these loans to Loanpad investors, they retain at least 25% of each loan, which acts as a subordinated ‘first loss’ piece. This first loss position will absorb any losses arising from a loan default first. This means that the risk of loss for Loanpad investors is very low, as the ‘effective’ loan-to-value (‘LTV’) will be around 35% on average. This makes the Loanpad investment structure probably one of the lowest risk P2P products anywhere on the market currently. Investor funds are also spread across several different loans, which provides diversification. Other features that we think will grab the attention of investors is the ability to exit their investments easily, and receive daily interest. The Classic Account allows investors to withdraw their funds immediately when needed, while the Premium Account requires a 60 day notice period prior to withdrawal of funds.The interest rates of 4% for the Classic Account, and 5% for the Premium Account, are not the highest available in the UK P2P space, but we think that when the very low risk profile is considered, and the liquidity on offer, it will be seen as an attractive yield by many investors. Loanpad also offers ISA wrappers on the above products, which will make income received tax efficient for British taxpayers.To learn more and review the full terms and conditions, click here. Interview with Louis Schwartz, Founder and CEO of Loanpad Louis, you are launching Loanpad today, please tell us why you set the business up, and what you are hoping to achieveWe set up Loanpad to create a fluid daily lending platform. Daily interest. Daily access (subject to liquidity). Daily diversification. We then created the lending structure to underpin this system because it was a way to significantly mitigate risks and is a very scalable model.  What types of accounts are you offering, and what are the expected returns for investors?We have two types of accounts. Our Classic Account has a 4% interest rate, with daily access. Investors can invest up to £20,000. We have to limit the size of the classic accounts to help us provide the daily access feature. Our Premium Account has a 5% interest rate. There is a 60-day withdrawal notification (or pay a small fee for immediate access). £250,000 account size limit. How will the funds of Loanpad investors be deployed? Can you explain the structure? What is the underlying collateral? Is there a trustee?Funds in investors lending accounts (Classic/Premium) will be spread across the entire Loanpad loan book. Security is held by a separate company, Loanpad Security Trustee Limited. Our lending partner funds at least 25% of any loan and their position takes the first loss. The loans will be secured against residential and commercial property (bridging/commercial finance, and land with planning permission (development finance). All properties will be located in England and Wales only.What will the effective LTV for Loanpad investors be, taking into account the 25% subordination of the loan originators?Generally between 10% and 50%, with a likely average of ~ 35% LTV. The 25% subordination is a minimum and will often be higher, at least at the start.You are offering investors an ability to exit their investments at short notice. This is very attractive, but how will you manage the liquidity position to ensure that there will be sufficient cash available to honour withdrawal requests?Firstly we enable easy access wherever possible. Unfortunately, we are unable to guarantee it. With that said, we have several mechanisms to meet this goal including our lending partner structure, limited lending account amounts and larger underwriters.The lending partners we work with will generally hold substantial reserves for future development commitments and can aid the platform with liquidity by buying back loans. This is always at the lending partners discretion (there is no obligation on them to do so) and the more lending partners we work with the more the likely available liquidity.  We do not expect to have to utilise this possibility.The classic account is also limited to £20,000 per investor, so the daily withdrawal expectations will be limited. Where liquidity available is very high, we will enable daily access from Premium for a very small fee ranging from 0.1% to 1.0%, dependent on that liquidity.We are also in discussions with institutional investors to provide “underwriting facilities” i.e. to provide capital for lending in larger scale where needed (as we scale up with new partners) and to provide liquidity in the event of larger than expected withdrawals. These investors range from high net worth individuals to listed investment trusts. This will be scaled as necessary. Our platform is built for retail investors, so we are primarily interested in growing our lender base and not using large investor capital except for the reasons stated.How much diversification will Loanpad investors have? How many loans? Investor funds will be spread across the entire loan book daily. On launch this will be just a handful of loans. However, as we grow, investors’ diversification will automatically grow too. Investors can see all loans and their allocations to each loan at any time, updated daily.What happens if a loan defaults? Can you explain how the interest cover fund (‘ICF’) works? The ICF will pay out all interest due on loans where a borrower has not paid it. This continues until the loan is recovered and/or a loss is crystallised. Where a loan goes into default the interest cover fund kicks in to cover daily interest on that loan. This fund exists to make sure investors get paid in full every day.Loans that go overdue are not automatically suspended. Loans are only suspended where there is a realistic prospect of a capital loss. As the security underpinning each loan will be larger than usual (because of the senior structure), capital loss is unlikely except in the rarest of occasions. However, where a possible capital loss does seems likely, the loan is suspended and investors’ funds in that specific loan will be frozen pending recovery (but continue to receive interest from ICF). What types of other P2P products are you looking to compete against? Is it Zopa, Ratesetter, Assetz Capital?We are competing with all other P2P platforms for investors. The biggest competition for investors will be the ones you have named plus Funding Circle. We are not competing with any P2P platforms for borrowers.We believe that our products offer investors a unique lending structure and a unique platform experience.  Our accounts offer the simplicity of typical online accounts, but with the risk profile as outlined. These accounts pay interest daily. All funds are diversified daily. And daily access is available normal conditions.You are a new platform. What backup servicing plans are in place, in case Loanpad is not around in the future? We have given considerable thought to our wind down plans to ensure that loans continue to be administered and investor funds returned in the event of an operator insolvency event or voluntary wind down. As such, we believe we have put in place a robust back up plan to ensure an appropriately funded and staffed wind down committee, together with external consultants, to help wind down any outstanding Loanbook.Please tell us about the team you have put together and their backgroundsWe have a growing team consisting of finance, legal, accounting, marketing, technology and compliance. Details if all can be found on the About us page, which will be updated frequently post launch. We have also engaged a variety of external specialists.What is the track record of the loan originator you are working with? How does Loanpad perform due diligence on the loans it adds to the platform? We have a long working history with our first originator and know them well. They have a very good track record – 40 years in business and profitable in every single year. They have had no material losses at all to speak of, the occasional default interest only has not been recovered. They have a very tight network of borrowers/developers. What authorisations have you received from the FCA?To operate an electronic system in relation to lending. We have also received authorisation from HMRC to be an ISA Manager, which enables us to offer the IFISA. The IFISA operates the same way as our standard account, but with the tax benefits for UK taxpayers. To visit Loanpad, click here. The post Loanpad offers low risk, well designed P2P products. We speak with CEO Louis Schwartz appeared first on Explore P2P. ..read more

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