Investors’ interest grows in peer-to-peer loans
QAll my life I’ve done what I’m supposed to have done and saved my money, and built up a good pension pot, but my savings are now languishing in accounts that are giving next to no interest and my pension pot seems unlikely to go as far as I’d hoped. What strategy should I adopt? and low supply, which is why many people are putting their savings into larger houses and second homes.
However, high fees, recent regulation changes and the need to keep money tied up for years has seriously reduced the attractiveness of this option.
This is why a growing number of people with money to invest are attracted by interest rates of up to eight per cent, currently available through peer-to-peer lending.
The companies in the sector provide differing opportunities and have differing policies on investment and ways of securing the loan, on the ArchOver platform, for example, the minimum investment is £1,000 with no maximum.
Even many larger lenders started with small investments that increased as their confidence in the platform increased.
When a company asks for a peer to peer business loan, following a thorough vetting, the project is put up on the ArchOver website, where registered lenders can browse to see which they would like to lend to.
All the loans are for fixed periods from three months to three years, with cash only tied up for a known, and relatively short, period, with the loans secured against the value of the borrower’s insured debtor book; what we term ‘secured and insured’.