First Peer-to-peer BTL mortgage launched

Last post: May 9, 2013

A new product allowing peer to peer investors lend to Buy to Let mortgages.

A crowd fund lender has a new hybrid product.  Welcome the peer-to-peer buy-to-let mortgage.  Dare to call it the P2PBTL? Actually, it is called "Lend-to-Let" and was specifically designed to help foreign borrowers secure mortgages for UK properties more easily.  Assetz Capital, of the Assetz property investment group, now offers P2P loans with up to 50% LTV.  The borrower would then be charged an interest rate over five years with a 3% arrangement fee.  This gives lenders on the other hand a yearly return of 6.5%.  This is equivalent to a 0.5% cash back on the first year alone.  Lenders are also free of any investment cost, there are also no charges on their yield, aside from the normal income tax, and there is also no risk of capital loss.  A first charge will be held by Assetz, on behalf of the lenders, while income from rent will go to a trust fund for the borrower to use for house repairs. The product though is quite unique and would suit a certain kind of lender, due to the fact that the borrowed money promises no capital growth, it would be tied up for a minimum of five years and levies income tax.  Assetz is targeting the market of high net worth foreign investors who are having a hard time accessing mainstream UK lenders since they are not citizens. The company did a comparison study on the rate of return of a standard property worth £100,000 and invested through a BTL for a span of five years.  The study showed that this would give £35,800 return for a £50,000 investment, though with a heavy exit cost amounting to £3,800.  Thus giving a total net income of £3,200 annually and a significant rate of capital appreciation. The Lend-to-Let product, on the other hand, has no exit costs and mortgage charges and gives a £16,250 return after five years for an investment of £100,000. This is a significantly new direction in both the BTL and P2P market and this product is deemed to address the lack of options for quality, high net individuals who cannot find lenders for acquiring property in the UK.  Lend-to-Let also provides high returns on investment, while adding safety nets for P2P lenders.  This product will be definitely felt in the market, especially in Northern England where loans rates are exceeded by high rental yields which reach an average of 8% gross.