Yes, deciding to become an investor of peer-to-peer loans can be a worthwhile investment. One of the main reasons for this is because you can usually receive a higher level of return on your investments than you would through traditional forms of saving or investing. Actual return on may be higher or lower and capital is at risk. Investments are not covered by the FSCS.

What is peer-to-peer lending?

To clarify, peer-to-peer lending involves individual investors who are anonymously lending money to other individuals or companies who are looking for loans. The investor has the ability to earn a healthy return on investment of 5% - 15% per annum, depending on the level of risk that they take on.The investor will usually earn higher returns on their investment compared to rates offered with traditional savings account and ISAs - and borrowers usually access rates that are on par with low rate personal loans and significantly lower than payday loans.Peer-to-peer lending platforms help to facilitate this action, acting as a marketplace for both borrowers and investors to connect on their terms.With Fund Ourselves, the main features are:Invest from £1,000 – You can open an account with just £1,000 and you have the option to increase this as any time.Auto-Diversify™ - We spread the risk of your investment by diversifying it with at least 10 borrowers, helping you to get the highest expected return possible.Tax free – We offer an Innovative Finance ISA which means that you can receive up to £20,000 worth of savings tax-free.Easy reporting – We have a dashboard that allows you to login and track your investments on a daily basis.

Return on investment is higher than fixed bonds or ISAs

For those investors looking to diversify their portfolios and earn a good return on their investments, peer-to-peer lending usually offers better higher rates than you would with a conventional cash ISA or fixed-bond account, which makes it an attractive option for lenders. Actual return on may be higher or lower and capital is at risk.

You can choose the level of risk

With peer-to-peer lending, investors have the ability to choose the level of risk they are willing to consider – which means you have the potential to control your investments and have total transparency. Please see returns estimates based on risk level chosen and actual Outcome statement from here. Highest rate of return carries the highest risk.For example, if you are willing to lend to those with bad credit, you are taking on more risk but able to earn the highest returns possible.If you prefer to play it safe, you can lend to people with good credit histories where the return is likely to be lower but less risky.

What are the risks?

Peer-to-peer lending is regulated by the Financial Conduct Authority and every lender has its own form of protection in place. However, it is still important to understand the potential risk involved, including:

• Borrower makes late repayments or defaults on loans
• Losses not covered by the Financial Services Compensation Scheme
• Early withdrawal can affect rates
• You could lose all or part of your investment if your losses are not covered by provision funds subject to availability of funds. Provision Fund Policy 

There is always the risk that borrowers do not pay on time or at all – and how this impacts your overall return on investment.Whilst you have the option to withdraw your money at any time, this can affect the final rate of interest that you earn and maximum interest is usually available if you keep your money locked in for the full period e.g 12 months. The withdrawal process may take some time to complete. You start receiving the investment back once the lent-out investments are completed, transferred to another lender or purchased by the provisional fund.

What protection is there for peer-to-peer lending?

At Fund Ourselves, we have a number of procedures in place to ensure that investors get the full returns possible.We have a customer service team who are dedicated to following up on bad debts. Your investment is protected by our own provision fund which aims to cover any principal investments subject to the availability of funds. Any bad debts are followed up by our in-house customer service team.
See the details from Provision Fund Policy.