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.
Why we like it
Interest rate: 11%
Term: 24 months
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.
Interest rate: 10.2%
Term: 12 months
2nd lien mortgage
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%
Term: 24 months
2nd lien mortgage
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.
Interest rate: 11%
Term: 20 months
1st lien mortgage
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.
And here are two we DON'T love right now....
Interest rate: 18%
Term: 2 years
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.
'Euro crypto mining assoc' loan
Interest rate: 7.0%
Term: 11 Months
Second Lien mortgage
The collateral for this Kuflink mortgage is located between Angel and Kings Cross in London. The team here at Explore P2P know this area, and this actual property very well. And frankly, we think the valuation provided is borderline ridiculous – £725,000 for a 45m2 ‘studio’ apartment. While Angel and Kings Cross are both premium areas, this building is located on a very busy road midway between the two centres, and is also close to significant amounts of social housing. We just can’t imagine this property selling for anything close to this value in the current ‘Brexit’ environment. There are two loans from the same borrower currently on Kuflink and both have valuations that look ‘off’ to us. Most loans on Kuflink sell out fairly quickly – we are not surprised that these have been sitting unfunded for several weeks now.
'Emerson court' loan
If you are interested in any of the loans above, please make sure to read all the information provided by each investment site and make sure that they are suitable for you. While we aim to highlight interesting opportunities, you must perform your own assessment of the risks and decide whether these, or similar loans offered on each site are suitable for your investment objectives.