Peer-to-peer lenders can offer returns of 5% - 15% per annum based on investing your money which is lent out to other borrowers looking for short term loans.
The potential return is based on the risk that you are willing to lend to, with good credit customers offering around 5% and bad credit customers posing higher risks, but also higher returns of up to 15%.
Whilst the earnings vary between peer-to-peer lenders with some only offering 3% for good credit or 8% for bad credit, Fund Ourselves is proud to offer returns that range from 5% to 15% based on diversifying your funds across a pool of unsecured loans.
With Fund Ourselves, our key features include:
Invest from £1000 – You can open an account with just £1000 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.
Do you earn more with a peer to peer lender than other types of savings or investments?
Yes, investing with a peer-to-peer lender can offer better returns than other mainstream savings and alternatives such as cash ISAs
(around 1% to 1.37%) and fixed bonds (1% to 1.8%).
Peer-to-peer lenders can offer more attractive rates because you are able to invest in the short term loans of other borrowers. Whilst this might seem riskier, this is managed by providers such as Fund Ourselves by assessing the income and affordability of each customer, diversifying your investment across a number of borrowers and having a provision fund in place to reimburse you for any losses.
See the details from Provision Fund Policy
How do you maximise your returns with peer to peer lending?
Choose the right provider
Some peer-to-peer lenders will offer more favourable rates than others, with some limited to just 8% maximum. Depending on the lender, you can invest in a range of products with some specialising in business loans, property or short term loans, each carrying their own risk and potential rewards.
Use the innovative finance ISA
An Innovative Finance ISA (IFISA) allows peer-to-peer loans
to be held in an individual savings account (ISA) and any interest up to £20,000 is tax free and you will not be taxed on capital gains.
Avoid early withdrawal
To earn the maximum rate, you are encouraged to keep your investment locked in for at least one year. You may not earn the amount advertised if you decide to withdraw money early.
When comparing savings products, there are ISAs that come with easy withdrawal or instant access, but the rates offered are lower to reflect this.
Manage your risk
You will need to manage your risk by deciding what type of borrower you wish to lend to or invest with. Those with bad credit histories are likely to pay higher rates of interest and you can earn better returns (up to 15%) by lending to this pool.
However, you may wish to lend somewhere in the middle or include good credit customers too, in order to manage your risk.
We offer a portal where you can choose who you wish to lend to. Our Auto-Diversify™ software spreads the risk of your investment by diversifying your investment with at least 10 borrowers.
How do you ensure my investment is protected?
We appreciate that our borrowers will need to pay on time in order for your investment to be successful. We carry out rigorous and thorough checks prior to funding any short term loan
and send out payment reminders on the days leading up to each repayment. For any delinquent payments, our friendly customer service team is able to follow up to ensure that deadlines and payments are met.
In addition, we have a provision fund in place that serves to reimburse our investors for any losses along the way. We are not part of the Financial Services Compensation Scheme, but have sufficient measures in place to ensure that your investment is protected to the maximum.
Actual return may be higher or lower and capital is at risk. Investments are not covered by the FSCS.