P2P investing is a relatively new type of funding model that has surfaced in recent years. The main idea behind P2P lending is to connect individual borrowers with lenders to access property finance. Like a crowdfunding model, P2P lending models allow businesses and individuals to source financing for business projects when they may not receive funding from a traditional lending institution.
LendInvest is a popular UK-based P2P platform for lending that has been picking up steam in recent years. With LendInvest, you can borrow or lend money directly to individuals through their platform. LendInvest claims that it offers flexibility compared to other traditional lending institutions.
But is that true? We put together this comprehensive review of LendInvest to answer that question. We will cover the platform’s features, pros, and cons. We will also give our verdict on whether the platform is worth trying out or not. This is our LendInvest review.
LendInvest is a good platform for P2P property finance. It has a wide range of loans to choose and manages a decent return of between 4% to 7%, which is a good rate for a property loan. LendInvest also takes care of the minutiae of lending so you don’t have to. Overall, we highly recommend the platform for P2P lending.
Pros & Cons
|Transparent financial information||Not “really” P2P lending|
|Large, diverse array of lending projects||No secondary market|
|Profitable company||P2P lending and bridge loans are inherently risky|
|Reasonable loan values||No easy access to valuation documents|
How Does LendInvest Work?
In essence, LendInvest has a relatively simple operating model. When you sign up and make an account, you can add a payment option via a bank transfer or credit or debit card. Once you create an account, you can browse the various loan terms they offer.
Most loans on the platform are for bridging loans which are on the timescale of a year or less. These kinds of short-term buy to let loans are generally ignored by the banks so there are a lot of opportunities to invest on the LendInvest platform.
There are two levels of loans that you can look at: A loans and B loans. A loans are higher-rated than B loans but pay a slightly lower interest rate because there is less risk of default. B loans rank behind A loans in terms of risk but generally have a higher interest rate to offset that risk. Most of the loans on the platform are A loans so you will find agreeable terms. Most loans range between 4% to 8%, while borrowers can usually get a rate between 6% and 13%.
When you lend money, you become one of several lenders on the platform that are now stakeholders. You get interest paid directly to your LendInvest account every interest period.
Technically, LendInvest is not a “genuine” P2P investing platform as the contracts you make are not between the individual lenders and the borrower. Instead, the contract is between the borrowers and LendInvest, not the actual borrower. This is primarily a technicality to streamline the process of lending. This way, you do not have to handle new paperwork every time you want to lend on the platform.
This setup comes with a few limitations, though. For example, the property finance investments have less flexibility than on other platforms, mainly because the loans are short-term and there is no secondary market for the loans.
Onboarding/Sign Up Process – 8/10
Compared to other lending platforms, LendInvest has a decent signup and onboarding process. Making an account involves what you would expect. You need to provide some personal information like your email, phone, and financial details. You will also need to submit to identity verification. LendInvest has partnered with several third-party organisations to speed up this identification process on both ends. Lenders can easily verify their identity by taking a selfie, and there are programs for verifying the identity of borrowers.
When you sign up, you give your email and an address. Next, you need to add your first name, last name, date of birth, mobile number, and home address. LendInvest has partnered with Jumio for proprietary technology for biometric onboarding for mortgage products, and you do not need to provide physical documents for the application process.
User Interface (UX) – 8/10
LendInvest has a pretty snappy and streamlined interface. From the dashboard, you can see the total amount you have invested and the average interest rate you are getting on any lended funds. You can also see how much liquid capital you have in your LendInvest account and also see which of your loans are on schedule, in arrears, or in default.
As a lender, you can browse the different loaning opportunities the platform has.
Most will give you a quick review of expected returns and LTV ratings. The max LTV rating provided is around 80%, which is higher than some other P2P platforms. This information is presented clearly and you can look for more specific info about loan terms on the site.
Overall, UX design is good. It is not as sleek as some other platforms but most important information is presented in an easy to read manner. For borrowers, the UX design is less friendly as you can’t just browse loans but have to go through a fairly lengthy application process.
Ease of Use – 7/10
If there is one thing we can say about LendInvest Funds Management Limited , it’s that the process is very hands-off for investors. This is both a good thing and a bad thing. LendInvest will deal with the borrowers so you do not have to. They will take care of the underwriting process and verifying borrowers’ identities as well as issuing the loans and disbursing interest payments. So as an investor, you can basically just relax and keep tabs on big picture metrics like your current account balance and return rate.
However, there is some information LendInvest does not provide to investors that they really should. For example, they don’t provide monthly loan updates or property valuation documents. Most of the time, you won’t even see pictures of the properties that your money is funding. For most, this won’t be too much of an issue, but it’s worth being aware of.
Features – 8/10
LendInvest focuses on P2P loans, and not much else. But what they do offer is solid. Investors have the option to pick between two investment methods. The self-select platform lets you choose returns through collective property loans, but you need to meet some requirements first.
- You need to have an annual income of at least £100,000 and net assets of £250,000 or more when excluding your primary residence.
- You must also have at least one investment in an unlisted company within the past 2 years or work in the private equity sector professionally.
- There is also a minimum investment of £5,000.
In other words, the bar to entry is pretty high and they are selective about who can lend money.
The other option is to invest in secured bonds that return a fixed 5.375% fixed rate. These bonds have a maturation time frame of about 2-3 years and are suitable candidates for ISA and SIPPs. Also, these bonds are listed on the London Stock Exchange as retail bonds.
Loan Risk Management
LendInvest only offers loans so a lot of their resources are devoted to handling those loans. All loans are backed by UK properties, and they go to great lengths to make sure that borrowers will not default on loans. LendInvest has received ARC’s highest ratings for loan servicing for over 5 years straight.
Arguably, the best part of LendInvest’s loans is that they handle all interest payments. LendInvest collects interest from borrowers and deposits the amount you are owed in your account every interest period. You do not have to interact with borrowers, and you will get regular updates on the status of your various investments. You can also set up auto-invest to reinvest any interest payments back into loans.
Fee Structure – 10/10
Fees you ask? If you are an investor, then LendInvest does not charge you fees at all. Lenders are the entire reason that the P2P platform can exist so you don’t have to pay any fees when you invest on the LendInvest platform. Of course, you will still be responsible for paying any taxes on realised gains from loan interest, but you don’t have to pay the platform anything.
For borrowers, LendInvest charges borrowing fees. These fees might differ depending on the type of loan. The margin between the interest paid by the borrowers and the income paid to the lender makes up the bulk of the company’s revenue. You can download a complete report documenting the interest rates paid by borrowers. Loans tend to increase in value over time so you can do your own research to keep track.
Also, you cannot include LendInvest platform investments in your ISA or SIPP but the secured income bonds options can be part of an ISA or SIPP.
Security: Is LendInvest Safe? – 8/10
Like any kind of investment, there are risks to investing with LendInvest. You are not guaranteed a return and may lose money. Money through investments in LendInvest is not protected by the Financial Services Compensation Scheme so you won’t get your money back if things go south.
As far as privacy goes, the company collects some personal data like your name, company, email address, physical address, and any other information that you share on the platform. They also will generate a file with your contact history and activity data surrounding protected documents. They will also share your information with third-party business partners.
Data on the platform is secured by the latest computer encryption protocols designed by a third-party security company. The company also does not store any debit card information. So LendInvest is about as safe and secure as a P2P investing platform can be.
What Other People Are Saying About LendInvest
LendInvest has a positive reputation among lenders. The company has a 4.5 out of 5 rating on Trustpilot from over 284 reviews. The majority of positive reviews praise the streamlined investing experience and the quality of customer service. Lenders and borrowers alike seem very pleased with using the website as a financial intermediary. Many investors also praise the clear presentation of the status of investments.
- What is LendInvest’s Valuation?
- As of January 2021, LendInvest has a valuation of 681 million USD (487 million GBP).
- What is the average return on LendInvest?
- The average expected return for LendInvest investments is between 4% to 7%. Secured bonds have a fixed return of 5.375%.
- How long is the average loan term on LendInvest?
- The average loan term on LendInvest is under a year. The maturation date for the secured bonds is between 2-3 years. You do not have access to your funds while the loan is in term, so you cannot redeem your investments early.
- Does LendInvest charge fees?
- LendInvest does not charge lenders fees. You can invest on the platform for free as long as you meet the eligibility requirements.
- Can I choose which loans I invest in?
- Yes, investors have 100% full control over which loans they invest in.