For all the resilience the UK economy has shown, there is no doubt that this year's ISA season is set against a backdrop of uncertainty. Whatever the pros and cons, Brexit, and a lack of clarity on what our future economic relationship with the EU will look like, has left us at a crossroads.
Peer-to-peer lending explained
The idea of peer-to-peer (P2P) lending is a simple one; you lend money to those who wish to borrow, with a view to receiving a great return for doing so.
What P2P lending companies do is facilitate this process to ensure controls are in place, thus making it a smooth and painless experience for everyone involved.
Anyone who is looking to grow their money will know that bank account interest rates are extremely low, typically around 0.5%. This is due to the low base rate and interest rates; great news for borrowers, but not for those wishing to save.
P2P lending offers an opportunity to earn 10 times this amount in interest on your money lent.
How does it work?
Firstly, decide on how much you wish to lend, and for how long. Your funds could be tied up for up to 5 years, so it’s important to be comfortable with this timescale. Remember, you are lending to those wishing to borrow, and 1-5 year loans are the norm.
Some companies offer the option to withdraw your funds during the loan term. There may be a cost for doing this and you'll have to wait until another lender comes in to replace you, but it is there should you need it. Ideally though, you want to avoid doing this, as you’ll lose out on the great rate of return!
What are the risks?
It is important to remember that your money is at risk, as, unlike banks, peer-to-peer lenders are not backed by the Financial Services Compensation Scheme (FSCS). However, P2P lenders have taken steps to mitigate this. Lending Works are the first peer-to-peer lender to offer an insurance which protects lenders from borrower defaults, along with other threats such as fraud, cybercrime and, in the worst case, a major economic downturn. This insurance, in addition to the stringent underwriting process and reserve fund to cover arrears and defaults, forms part of our market-leading protection – the Lending Works Shield.
Want to know more about becoming a lender with Lending Works? Check out our lending page or give us a call on 020 7096 8512.
The 2019 ISA season is now in full swing, and it's as good a time as any to focus on financial planning - and, within that, looking ahead to your retirement years to ensure financial security.
The Lifetime ISA (LISA), announced in 2016, would prove to be one of George Osborne’s last flagship gestures to UK savers and investors as Chancellor, eventually launching against a backdrop of anti-climax a year later in April 2017.
As the tax year end approaches, the financial services industry readies itself for a flurry of activity. That's in large part because, with just a couple of months to go, the so-called 'ISA season' is upon us.
Over the last decade, there can be little dispute that the reputation of mainstream banks – and particularly the so-called ‘Big Four’ (HSBC, Barclays, Lloyds and RBS) – is at its lowest ebb.
The peer-to-peer (P2P) lending industry is now regulated by the Financial Conduct Authority (FCA). The regulatory framework has been designed to protect customers and promote effective competition.
Loan underwriting is the process that we undertake to analyse all of the information provided by each loan applicant and their credit file to assess whether or not that applicant meets our minimum loan criteria. As part of that process all data is verified, analysed and summarised to paint a picture of each applicant.
When you earn interest from a regular bank savings account, for example, the bank automatically deducts basic rate tax (currently 20%) before paying your interest. With interest earned from peer-to-peer lending, tax is not deducted automatically so lenders will need to declare their income to HMRC.
As 2018 draws to a close, with our bellies full of Christmas turkey, it's only natural to look back on the past 12 months and reflect. No doubt, it's been a turbulent one economically and politically, and not everyone has had it all their own way.