LendInvest have launched a new product that will allow lenders to be more selective about the level of risk and reward that they would like to achieve.
The rapidly growing p2p mortgage lender prides itself on underwriting all loans to a high standard, and they insist that the newly offered Tranche Loans will continue to adhere to that standard. The difference will only become clear in the event of a default. Upon a defaulted loan being wound up, Tranche A investors will be the first to be paid, Tranche B second, and so on. In all tranches the security for loans remains unchanged.
"This is another first for LendInvest, as we continue to show our ability to innovate and provide investors with the best investment solution.
As a true peer-to-peer investment platform, investors have the ability to select the actual loan that they invest in. As part of this, an investor is able to see all of the relevant information on the property that they are lending against, and the borrower's situation. With Tranche Loans, investors now have the added flexibility of being able to choose where in the capital stack they invest.
Our new Tranche Loans allow investors to choose the level of risk that they are comfortable with, within a single mortgage loan, and to adjust their investment return accordingly."
Should the product prove to be a hit with investors, LendInvest may begin lending to borrowers where their investors have a higher appetite for risk. The platform also hopes that the tranche system will benefit mainstream borrowers – by allowing them to offer a lower cost blended rate. The platform will not increase their margin – instead passing any savings onto their borrowers. Indeed, LendInvest have committed to driving their margin down even further as transaction volumes increase.
The tranche loans will be gradually introduced into the LendInvest system – once the platform is confident of their lenders appetite. The platform also hinted at a number of other exciting developments. There are reportedly a number of new products in the pipeline – all aimed at offering lower cost, longer-term mortgages to borrowers whilst maintaining superior risk-adjusted returns for investors.