THE NEW ALTERNATIVE TO BANK SAVINGS

WHAT OPTIONS DO I HAVE WITHIN THE PEER-TO-PEER

MARKET?

THE 3 TOP TYPES OF P2P

There are three principal types of P2P lending:Consumer, Business and Property

Landbay operates in the Property space, specialising further by lending solely on Buy-to-Let mortgages secured against British residential property

CONSUMER

Used for: paying off expensive credit card debts, debt consolidation or funding purchases such as home improvements, televisions and cars

P2P lending started here and has the longest track record in both the UK & USA

When lending in the consumer finance area an individual’s credit ratings are very important, however some borrowers actually use short-term P2P consumer financing to improve poor credit ratings

BUSINESS

Used for: funding working capital, business expansion & asset finance

Can be unsecured or secured against assets such as property or by personal guarantees

Risks lie in the fact that companies may fall into bankruptcy (therefore unable to repay their loans)

Business loan platforms tend not to have provision funds

Like consumer loans, businesses’ credit ratings are of high importance in assessing loan applications

PROPERTY

P2P lending on property has a clear advantage over traditional P2P lending: bricks and mortar security

Platforms secure loans against property. If a borrower cannot repay their loan, the platform can repossess & sell the property to fund any shortfall

Experts assess property valuations so lenders can calculate risk based on LTV

P2P platforms provide lenders & borrowers with access to commercial, bridging & residential property loans

BRIDGING PROPERTY LENDING

Used for (re)development or refurbishment projects with a limited duration

Loans tend to come at a higher rate as they rely on refinancing

Risks lie in market conditions, property characteristics and customer background, rather than long term credit repayment ability

Potential lenders must consider whether the borrower will be able to refinance in the future; “market risk” is generally more important than “credit risk”

Usually for non-income-producing assets because of required building works

Often for customers buying properties at auction, where short timescales to complete transactions and valuations are important, leading to higher loan rates

COMMERCIAL PROPERTY LENDING

The strength of commercial property (offices, shops) relies on business occupation, rather than households

Loans are more directly affected by factors such as general economic conditions, individual business performance and Government policies

These factors can increase the probability of default and average loan values tend to be higher

Less incentive for management to continue running businesses that are underperforming, or indeed loss making, compared to a basic need to have a roof over your head, as in the case of residential property

RESIDENTIAL PROPERTY LENDING

Mainly occupied and driven by more demographic factors and economic conditions such as employment prospects

Borrowers much more likely to be seeking longer term loans than something shorter term and less thought-out

Within the residential market, BTL borrowers rely on their properties for income sources

BTL landlords are often experienced and less likely to default

During the last recession, average house prices fell by 17.4% (Source: CML), at the peak of the Crisis, in 2008, the BTL repossession rate was low at 0.50%

MILESTONES TO DATE THANK YOU FOR WATCHING

OUR PRESENTATION

For more information about Landbay’s lending process,

see our P2P Mortgages Explanation

@LandbayUK

info@landbay.co.uk

DISCLAIMERLandbay operates a dynamic peer-to-peer (P2P) lending platform specialising in property loans secured by first ranking mortgages. While loan investments are secured against property, capital is still at risk and therefore Landbay lenders face the possibility of losing money. Investments in mortgages are long-term in nature and may not be readily realisable.

Landbay is regulated by the FCA, however, lenders on Landbay and other P2P platforms are not covered by Financial Services Compensation scheme.

We recommend that you seek independent financial advice if you are in any doubt as to whether lending on Landbay is suitable for you.