What is peer-to-peer investing
Peer-to-peer (P2P) lending platforms simply bring people wanting to invest together with matching borrowers cutting down the middleman in order to deliver better value to investors as well as borrowers. Traditional banks earn money by taking deposits from customers at very low interest rates and lending that money at much higher interest rates to borrowers. Peer-to-peer lending platforms are not banks. By cutting out the middle man, PTP platforms allows investors to get full returns from the borrower
Online PTP platforms like Fund Ourselves are able to provide better options than traditional banks to both borrowers and investors due to lower costs.
How does peer-to-peer investing work
As required by the FCA, all investors are required to confirm their investment profile based on their knowledge and experience of investing in peer-to-peer platforms such as Fund Ourselves.
After selecting the interest rate and risk zone, investments made at Fund Ourselves are matched automatically to matching borrowers who pass the strict credit scoring and affordability checks.
Majority of PTP loans provided by Fund Ourselves are unsecured personal loans, though some of the largest amounts are lent to businesses.
What returns can be expected on peer-to-peer investments
When lending on Fund Ourselves platform, investors can choose their own return up to 15% per annum. Fund Ourselves maintains the balance of high risk and low risk borrowers using a comprehensive credit and affordability assessment of borrowers in its PTP platform. As with any investment, past performance does not guarantee future returns and actual return may be higher or lower
Is peer-to-peer investment protected
Peer-to-peer investments do not qualify for protection under the Financial Services Compensation Scheme (FSCS) provided by the traditional bank with the capital at risk.
Peer to peer platforms operate under different models. Fund Ourselves operates a provision fund that aim to reimburse the principal investment lost in case of a default. Additionally, Fund Ourselves has a fully automated diversification model to significantly reduce exposures to investor.
Reimbursement under the provision fund is subject to the fund availability; therefore, it is not guaranteed.