Fund Ourselves

How Does Peer to Peer Lending Work?

How Does Peer to Peer Lending Work?

Peer-to-peer lending allows you to earn up to 15% per annum by investing in other people who are looking to borrow short term loans.
With the peer-to-peer lender acting as a middleman, you are essentially able to invest anonymously to a pool of people or businesses who are looking for loans – and you can earn a healthy return on investment depending on the level of risk that you take on.
Borrowers are organised according to their credit scores, whereby lending to good credit customers can offer returns of around 5%, but lending to people with bad credit histories can offer greater returns of up to 15%.
To earn the best return possible, you are encouraged to keep your money locked in for the duration of the loan (minimum 12 months) and avoid easy withdrawal where possible.
At Fund Ourselves, we offer:
Investing from £1000 – 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.

What is peer-to-peer lending invested in?

At Fund Ourselves, we invest in other people who are looking for unsecured loans, ranging from £50 to £500.
Most peer-to-peer loan companies will invest in short term loans, however, other companies have been known to offer investing into business loans, guarantor loans and even assets such as property.

What is the minimum I can invest?

You can invest from as little as £1000 to get started and you can monitor the results using our online portal. With some other P2P providers, you may need to start with £500 to be eligible.

What is the maximum I can invest?

You can invest quite large amounts through peer-to-peer lending, as an individual or a company. It is not uncommon to invest as much as £50,000 or £1 million.

Can anyone invest in peer-to-peer lending?

Yes, you only need a minimum of £1,000 and there is no credit scoring or affordability checks from an investor’s perspective.

Is there tax charged on peer-to-peer lending?

You are able to use an Innovative Finance ISA which gives you up to £20,000 of any savings made, tax-free. This will also make you exempt from any earnings made through capital gains tax. Beyond this, any returns made will be eligible for taxation.

How do borrowers benefit from peer-to-peer loans?

Peer-to-peer lending gives borrowers with potentially less than perfect credit scores the opportunity to get funds that may not have been accessible. Since P2P lenders are willing to take a view on bad credit, this may help a large portion of individuals who have been denied credit elsewhere or do not have any collateral that could be used for secured lending.
For customers with good credit ratings, they can access some of the lowest rates on the market, which are on par or lower than most personal loans.

What are the risks of peer-to-peer lending?

With peer-to-peer lending, there are risks that your borrowers do not repay on time or at all. Your investment is not covered by the Financial Services Compensation Scheme, so lenders such as Fund Ourselves will put important measures into place to protect your investment.
This includes:

Is peer-to-peer lending covered by the Financial Services Compensation Scheme?

No, peer-to-peer lending is not covered by the government scheme. However, Fund Ourselves has a provision fund in place which is used to reimburse investors for any bad debts.
Peer-to-peer lending is regulated by the Financial Conduct Authority, so important measures are in place to protect both borrowers and lenders to the fullest.