The firms allows property professionals and ordinary investors to fund the same projects at different levels of risk.
The UK’s first hybrid peer-to-peer platform, selling lower-risk investments on secured property loans was launched today.
Loanpad said its “unique” business model allows ordinary investors to fund the same projects as property professionals, at lower risk than the experts.
The London-based business said established property lenders will take on the higher risk part of each loan for a higher rates of interest, while ordinary investors will take on the safer senior part of the loan, but still earn higher-than-inflation returns. However, it stressed that an investor’s capital is at risk.
The firm, which is regulated by the Financial Conduct Authority, said it will accept investments ranging between £10 and £250,000.
Loanpad founder and chief Louis Schwartz said: “We wanted our model to give everyday investors access to a premier lending experience. By partnering with lending partners who originate our loans, we’re able to offer greater security than a typical property loan.”
Schwartz, a former property lawyer, added: “As a Loanpad investor, you only fund the lower-risk senior part of the loan, while the lending partners fund the junior part and retain the first loss position. So if a loan goes bad, their investment suffers a complete loss before investors are affected.”
Loanpad’s launch comes as British house prices grew at annual growth of just 0.1% in January due to Brexit uncertainty, the slowest in six years, according to the country’s largest mortgage provider Nationwide.
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