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 have recently sold out. If they have, it is likely that very similar opportunities are available on each platform. Our goal is to highlight the types of opportunities that have been available on various platforms recently, and which types of loans offer the best (and worst) risk versus reward right now.
Why we like it
Interest rate: 13%
Term: 18 months
At the moment on Mintos you can earn rates above 15% if you are able to invest for a duration of 18 months. However, as always it pays to focus on the higher quality lenders, even if that means accepting a slightly lower yield. Our pick is this loan from Iute Credit, which has a group buyback guarantee and a yield of 13%. Iute Credit had a fantastic 2022, making almost €20m in profits. It is now our third highest rated Mintos lender. The main downside to this loan is that the location is Albania, which is a higher risk country. However, as this loan is protected by a group guarantee, this is less of a concern than if the entire lending group was based in Albania.
Interest rate: 14%
Term: 23 months
asset backed loan
This is a good example of the type of loans that are available on P2P site HeavyFinance. While the site has been expanding quickly and now offers a wide variety of loans, this is an excellent introduction to the type of opportunity available. A farmer is looking to benefit from the increase in grain prices, and will use this machinery to produce wheat and other grain crops. The loan is secured on the machinery, with an LTV of 70%. The farmer has other loans with HeavyFinance loans and has made each payment on time.
Interest rate: 10%
Term: 9 months
1ST CHARGE MORTGAGE
This loan is no longer available – it sold out within hours. But we are still listing it here as an example of the types of high quality loans that have been available at Max Crowdfund recently. The loan is to a developer who buys properties, converts them into student accommodation (which increases the value) and then either sells them or refinances them onto a longer term mortgage. This developer understands the market well and has undertaken several previous similar projects. We like these types of loans because there is a strong business plan, a good borrower track record and a proper exit strategy. A relatively small amount of development work is required, so there is a limited opportunity for cost overruns and delays. If you are interested in further opportunities like this we recommend opening an account and reacting fast when loans go live.
Interest rate: 13%
Term: 24 months
Another loan that we consider to be the best available right now is also found at Mintos. We would not normally include two Mintos loans in this series, but we did not find any better offers available on all the other sites that we reviewed. It comes from Delfin Group, which is currently our highest rated lender on Mintos (82/100). Loans with a shorter duration are also available but the interest rates fall quickly for loans below 24 months. Delfin has been consistently profitable over the last 5 years, and made a profit of €6m in 2022. It has a sensible balance sheet structure and is well managed. We don’t think that loans with interest rates as high as 13% will be available from Delfin for much longer.
And here are two loans we DON'T like....
Interest rate: 7.4%
Term: 12 months
We don’t think there’s a high risk of loss on this loan. So why have we included it as a loan we don’t like? We don’t think that the interest rate is high enough. Kuflink has consistently been offering investments in the 6.5-7.5% range for many years now. However, since 2020, UK interest base rates have increased from 0.1% to 4.25%. This means that the extra return above base rates that investors are earning has shrunk significantly. Kuflink should be charging their borrowers higher rates than they were before, and passing this onto their investor clients.
Commercial Road HR1
Interest rate: 11%
Term: 18 months
1st lien mortgage
Nothing about this loan from Estateguru makes much sense to us. The loan is to fund some development land on the outskirts of Tallin, Estonia. It does not have planning permission for the intended development, but the valuer has someone concluded that the land is worth €2.7m. Estateguru is highlighting €3.2m as the collateral value, even though the difference between the two figures represents taxes that is not relevant from a recovery value perspective. The source of repayment for investors stated is very vague – it is listed as ‘sale, refinance or incoming revenues’. Estateguru make this statement for each loan – it would be helpful if they could spend some time outlining what the actual real plan is for the borrower to repay the loan. In our view there is nowhere near enough information provided to properly assess all the risks on this loan, and there is a high risk that something could go wrong between now and completion of any development.
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 potentially interesting opportunities, you must perform your own assessment of the risks and make your own independent decision on whether to invest, and whether these, or similar loans offered on each site are suitable for your investment objectives. All information is supplied in good faith based on information which we believe, but do not guarantee, to be accurate or complete; we are not responsible for errors or omissions contained therein. Explore P2P is not a financial advisor and no content can be or should be considered to constitute financial advice. All content provided is for informational purposes only.
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