** Lendinvest review updated December 4th, 2019 **
Lendinvest offers peer to peer property bridging and development lending via loans secured by property at lower loan-to-values and secured bonds listed on the London stock exchange. Lendinvest provides competitive returns for the amount of risk needed to be taken. Lendinvest has strong operating history and is profitable which inspires confidence. I love knowing the company can sustain itself financially rather than private investors funding losses during growth. Read on for my in-depth Lendinvest review where I share my experiences as a lender.
My November 2019 Investment: Unchanged
My current rate of return: 5.85% (Net return after bad debt and fees but before tax)
|Est. Annual Returns:||4% - 7%
|My Risk Rating *:|
|Loan Security:||Property, debentures, personal guarantees|
|Min Investment:||£5,000 deposit, £100 per loan, £1 auto-invest|
|Time to Become Invested:||Fast but varies on loan availability|
|Time Needed Managing:||Manual invest: medium, Auto-invest: none|
|Lending Agreements With:||Lendinvest|
|Sign Up:||Click here to open an account|
* This opinion risk rating factors in types of loans offered, interest rates, platform history, default numbers and my own investing experience. My risk rating explained.
How Do I Open An Account?
Sign up here for a Lendinvest account. (Currently, there are no cashback offers.)
The Lendinvest Review – What You Need to Know:
- Loans secured by property
- Profitable company / financial stability
- Large company with diverse array of other company arms
- Transparent information / publishes its loan book
- £50,000 of possible FSCS protection for Lendinvest incorrect loan administering or fraud
- £2.5bn+ lent
- Low loan-to-values on loans / average of 56% across loan book
- Auto-reinvest £1 minimum
- Loan contracts are between lenders’ and Lendinvest rather than directly with borrowers
- No secondary market to exit loans
- Advertised FSCS protection could be misunderstood
- Money deposited by debit card cannot be withdrawn for 90 days
- Lower interest returns for bridging loans / is the risk vs return worthwhile?
- No access to valuation documents / heavy reliance on Lendinvest
Lendinvest Review: My experiences so far….
I’ve been investing through Lendinvest since October 2016 and my experiences have been nothing other than good. Lendinvest has a constant stream of new loans and payments have always been made on time. I particularly like the low loan-to-values. After a visit to their offices to see their operations, I have become even more comfortable with Lendinvest.
What Is Lendinvest?
Lendinvest is a U.K. based peer to peer lending company that offers secured peer to peer property and bridging loans and secured bonds listed on the London Stock Exchange. Borrowers are experienced property developers with proven track records.
I only cover the peer to peer investments as I am not a fan of property backed bonds.
How Can I Contact Lendinvest?
UK Tel: 0800 130 3388
When Did Lendinvest Launch?
Are They Regulated?
Yes, by the UK Government’s Financial Conduct Authority under interim permissions. FCA regulation is nothing like the FSCS (Financial Services Compensation Scheme), which covers consumers when they deposit money in banks. The FCA does have the ability to pursue criminal action against companies that violate its standards, but the FCA is not a government entity and it’s funded by the very companies it regulates.
Who Can Open An Account?
Any person who has a UK bank account and can pass the money laundering and identification checks.
Lendinvest’s website is very clean and easy to follow. Here’s what the dashboard looks like:
And the portfolio page:
How Much Time Will It Take To Become Invested?
This always depends on demand and supply. When I first signed up there weren’t many loans available but this changes month to month.
What’s The Minimum Deposit / Investment?
Deposit: £1,000 minimum
Loans: £100 minimum
How Are Deposits Made?
Via bank transfer which takes up to three business days or via debit card instant deposit with a limit of £100,000.
What’s Their Communication / Support Like?
Does Lendinvest Offer An Innovative Finance ISA?
Can I Lendinvest Investments Be Used In A SIPP?
How Much Annual Interest Does Lendinvest Pay Lenders?
Loans pay various return rates ranging from 6% to 8%. This tends to be lower compared to other companies offering property bridging and development loans however I view Lendinvest’s loans to be less risky due to the borrower criteria and the lower loan-to-values on the securities.
Is Interest Accrued Immediately Or When the Loan Starts?
Interest accrues when your money is matched into loans.
When Is Interest Paid?
Last day of each month
Am I Lending To Lendinvest Or To The Borrower?
All loan contracts are between lenders’ and Lendinvest.
What Are The Fees?
No lender fees
Is There An Auto-Invest Option?
Lendinvest does offer both auto-invest and auto-reinvest and they both work well. Auto-invest has a minimum £100 investment and allows several lending criteria to be chosen:
Auto-reinvest works similarly and triggers on amounts as low as £1, but you can only withdraw once you have £100 in interest:
How Much Time Is Needed Managing My Account and Investments?
This depends on whether you want to use auto-invest and your level of comfort. Lendinvest doesn’t supply property valuation documents so time is needed to research the property valuations.
In a perfect world, one would fully research each loan and invest in only the loans with sensible valuations on the security. Most lenders’ don’t have the time and patience for this and either invest in each loan to diversify or use the auto-invest function.
If you use auto-invest, time management is reduced to zero.
How Long Are The Loans?
Up to three years but most loans tend to be 12 months.
Is There A Secondary Market To Buy, Sell And Exit Loans?
What Security Does Lendinvest Loan Against?
All loans are secured with a first ranking charge over property with reasonable loan-to-values in the 45% to 75% range. In some cases, Lendinvest also takes personal guarantees and the assets of the business (debentures). While personal guarantees are nice, first charges are the only securities you need to pay attention to.
What Are The Loan Default Loss Rates
Lendinvest’s provisioned default loss rates* are:
Provisioned loss rate: Loans from each origination vintage that were provisioned against on the most recent quarterly provisioning review (prior to the cut-off date) and includes actual realised losses. Based on actual provisioned £ amount and actual realised loss £ amount.
Lendinvest holds over 80% of its loans in property located in London and the South East so if a property crash occurs, I would expect to see default rates increase dramatically.
Default loss rates can change and Lendivest publishes its statistics which are downloadable on the Statements page when you have an account. Unfortunately you can’t access these statistics unless you have an account.
What Happens If Lendinvest Ceases Operations?
Since lenders’ have agreements with Lendinvest rather than directly with borrowers, a company failure could be a very complicated situation.
Lendinvest has a partnership operation with Pepper UK, a loan servicing company. Lendinvest states that if they ceased trading, Pepper UK would continue to service borrowers loans. In addition, a company called Capita has been appointed as the back-up servicer to manage Lendinvest’s loan book.
What Are the Different Accounts and Investment Options Lendinvest Offers?
Lendinvest only offers loans on property bridging and development projects.
THUMBS UP FOR LENDINVEST:
Loans Secured By Property
Property is one the most secured loan collaterals available within peer to peer lending, provided the loan-to-values are at reasonable levels and the valuations are correct. When you lend through Lendinvest, 1st charges are in place on all loans so you can feel comfortable knowing your loan is well collateralised.
Despite loans being secured by property, the hands of the legal clock move slowly so in the event of default, it can take months or years for capital to be recovered and it’s never a guarantee.
Profitable Company & Financial Stability
Lendinvest is one of the few peer to peer lending companies that is profitable. In 2016, Lendinvest profited to the tune of £3.4m. A financially healthy company that’s turning a profit is one I am comfortable investing through. If you want to look at Lendinvest’s company accounts you can do so here.
I visited Lendinvest in September 2018 and was extremely impressed with the team and their operation. Lendinvest has many different parts to its company, is well capitalised and its team is experienced. I would have no problem investing more money through Lendinvest.
Lendinvest has been analysed by the independent credit rating company ARC and has been given a thumbs up for stability. ARC rates companies based on their ability to meet their financial obligations. You can read Lendinvest’s ARC report here.
£1.8bn+ Loan Book
Lendinvest’s loan book is steadily growing. When a peer to peer company is writing that many loans, they are generating fees. As long as Lendinvest maintains their borrower quality, fees are what keeps a company in business and that’s a good thing for lenders.
Lendinvest lends at very sensible loan-to-values (LTV). My loans range from 35% to 70%, with the majority being in the 55% – 65% range. Lendinvest’s entire loan book has an LTV of only 56%, Provided valuations are correct, lower LTVs hopefully means that in a default event, there would be enough wiggle room to sell the property and pay all expenses plus lenders’ capital and interest.
Auto-Invest / Reinvest
For those looking for more hands-off investing, the auto-investment and reinvestment tool works well. You are able to set investment criteria including maximum amounts, maximum loan-to-values and tranches. Auto-reinvest triggers at £1 so lenders’ who receive smaller interest repayments will be happy their money isn’t sitting idle.
I love Lendinvest’s philosophy toward transparency. They publish yearly company financials, loan and default statistics, and even their entire loan book. Once you open an account, you can download the entire loan book which shows the spread between what the interest rate the lender receives and what interest rate the borrower is paying. This shows me Lendinvest has nothing to hide and I think some peer to peer companies could learn a thing a two here.
FSCS Protection Due To Incorrect Loan Administering Or Fraud
Lendinvest state that:
“In the event of LendInvest Funds Management Limited being unable to meet its liabilities, an investor may be entitled to compensation under the Financial Services Compensation Scheme. Currently, the maximum level of compensation an investor could receive from the Scheme for a claim against an investment firm is 100% of the first £50,000 per person.
The FSCS might apply if you lose money because your investments have not been administered correctly, or as a result of misrepresentation or fraud, and the authorised firm concerned has gone out of business and cannot pay compensation or return your investments or any cash held on your behalf.
The FSCS will not pay compensation if your investment performs poorly as a result of market conditions.”
Please be aware that this FSCS protection isn’t the same as the £85,000 one that covers your savings account in the event of bank failure.
THUMBS DOWN FOR LENDINVEST:
Loan Contracts Are Between Lenders and Lendinvest
This is my one major gripe about Lendinvest. When I loan money, I want to have direct agreements with the borrowers rather than with the platform, because if the platform ceases to trade, I have no control over my loan agreements. This dislike is certainly offset by the fact Lendinvest is a larger stable company.
No Secondary Market to Buy And Sell Loans
My second major gripe is the lack of a secondary market. Secondary markets are nothing more than a perk and should never be relied on as a reliable means of exit, but it’s always nice to have an exit option.
Lower Interest Returns For Bridging Loans
Property development bridging loans can be risky despite lower loan-to-values. Borrowers are paying up to 15% per year in interest so I question whether the returns Lendinvest offers to lenders’ are on par with the risk. When I invest in bridging loans, I look for returns in the 10%+ range. Lendinvest offers between 6-8%.
Advertised FSCS Protection Could Be Misunderstood
Recently, Lendinvest sent out an email stating lenders were covered by FSCS protection. This type of protection is usually given to bank savers and covers up to £85,000 per person in case of bank failure. Lendinvest’s FSCS coverage doesn’t cover your actual loans but covers an investor up to £50,000 in cases of incorrect loan administering or fraud. Don’t mistake this to mean this protection secures your loans in case of default or poor performance. Be sure to read more about Lendinvest’s FSCS protection in their FAQ’s.
No Access To Valuation Documents / Heavy Reliance on Lendinvest
Lenders who want to perform their own research on properties aren’t privy to the valuation documents that Lendinvest have. This is unusual considering Lendinvest is very transparent with its information and most other peer to peer bridging loan companies freely offer these documents. This means lenders are heavily reliant on Lendinvest unless they want to do their own valuation due diligence. It’s been my experience that peer to peer property valuations can be extremely subjective so I always like to look through them before I invest. It’s a shame this isn’t possible with Lendnivest.
Cannot Withdraw Funds Deposited By Debit Card For 90 Days
This is a strange policy which has some of readers’ perplexed. Let’s imagine you deposit money via your debit card but either change your mind or can’t find any appealing loans, you’re money cannot be withdrawn for 90 days. Just a policy to be aware of.
I’ve always wanted to invest more through Lendinvest, however, I don’t like that I’m technically lending money to Lendinvest rather than directly to borrowers. I currently pick and choose loans based on the sensibility of property valuations. Most loans I ignore due to the lower interest returns offered. I would consider investing further once the negatives are addressed.
The Lendinvest Review Conclusion
On paper, Lendinvest has many positives. First and foremost it’s a profitably run operation, which many peer to peer companies are not. This inspires long-term confidence in knowing the company can sustain itself financially. The interest returns are on the low side for property bridging and development loans, however, I consider them safer than some other company loans so that’s the trade-off. I don’t like the fact valuation documents aren’t available so lenders have to do their own research in order to identify the good loans. Despite the negatives, if you’re looking to invest through a secure company that also offers a great auto-invest system, Lendinvest is worth consideration.
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** This unbiased Lendinvest review is for information purposes only and should not be regarded as investment advice. Opinions expressed in this Lendinvest review are based on my own personal experiences, investing my own money. Peer to peer lending contains risks so never invest more than you can afford to lose.**