Loanpad Claims New ‘Hybrid’ IFISA Platform is Lower Risk
A new peer-to-peer platform is claiming it has launched the UK’s first ever ‘hybrid’ Innovative Finance ISA (IFISA).
Loanpad, which launched in January 2019, has developed a two-tier lending platform where individual investors fund property loans alongside established property lenders.
The so-called ‘lending partners’ will always fund the risker parts of any loan on a first-loss basis. This means that retail investors will only ever invest in the lower-risk parts of the loan, which effectively lowers the chance that they will lose any of their capital investments.
“We wanted our model to give everyday investors access to a premier lending experience,” said Louis Schwartz , Loanpad’s founder and chief executive. “By partnering with lending partners who originate our loans, we’re able to offer greater security than a typical property loan.
“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 IFISA can be opened with as little as £10, and investors can earn between four and five per cent in interest, depending on which type of account they chose.
The ‘classic’ account gives investors daily access to their money and can be managed free of charge.
The ‘premium’ account comes with a 60-day notice period for free withdrawals, or a small charge for early access.
At the time of writing, the classic account was offering four per cent in tax-free returns, while the premier account was paying five per cent.
Updated: Wednesday, February 13th, 2019