With new loan offerings landing imminently on site we revisit a recurring theme of our reporting on the peer-to-peer (P2P) business lending scene: the key factors of asset appraisal – security, access and yield.
Let’s use these criteria to scrutinise our own P2P loans (average gross yield of over 8 per cent across £11 million facilitated loans) and top savings accounts – still with a return of just over 1 per cent on average for accounts that may be linked to a tax-free Individual Savings Accounts (see earlier article here).
Our current offering is a fixed-rate loan of £200,000, yielding 8 per cent, property-backed, with an A+ rating from our credit committee. It’s a pure loan, not a participation stake, but it offers the security of real estate (roughly at 64 per cent loan-to-value). A gross yield of 8 per cent equates to a return of 7 per cent net of our fees. The loan is closing when filled, and is currently 73 per cent bid. All loans on site are eligible for inclusion in a Money&Co. ISA. If you do not have a Money&Co. ISA yet, please click on the ISA application tab on the Home page and fill in the form. You will need your National Insurance number. The ISA allowance for 2018/19 is £20,000. For full detail on the process, see below. If you invest via our Innovative Finance Individual Savings Account (ISA – see below for a step-by-step guide to how this works) you will receive the income tax-free.
A Process Guide To Innovative Finance ISA Investment
Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable. So here’s our guide to the process:
The ISA allowance for 2018/19 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here. Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.