Peer to peer (P2P) bridge loans have become increasingly popular and more widely trusted in the last few years, as they offer an attractive way for investors to invest their money, whilst allowing them to choose their own combinations of risk and reward.
A peer to peer (P2P) bridging loan allows investors to invest capital towards part of a loan that a lender has agreed to borrow. A P2P bridge loan is good for those who want a short term investment with a predictable return and a defined exit strategy.
At Bridging Options, we bring together people or businesses that want to lend money with those that require necessary funding fast.
Below we explain how P2P bridging loans work, what makes them an attractive option for both borrowers and investors, and how we can make them available to consumers.
What is a peer to peer bridging loan?
Peer to peer platforms have been around for over a decade now and are popular with investors, start-ups, small businesses and medium sized enterprises.
Today, investors can’t afford to wait around to make money and with high street bank accounts and ISA’s offering very little, if any, rates of return on savings, some will seek alternative avenues in which to invest – such as P2P lending.
Peer-to-peer bridge loans work differently from bank loans. This is because you are borrowing off real people whereas when you get a loan from the bank, they will use deposits made into accounts by other customers, to fund the loan.
With peer-to-peer lending, however, borrowers are matched directly with investors. This way investors get to see and select exactly which loans they want to fund and can expect to receive interest on top of the money financed once the loan itself is repaid.
At Bridging Options, we source the funding for our P2P bridge loans from a large group of individual investors contributing a small percentage each, rather than a specific backer.
What is a peer to peer bridge loan used for?
At Bridging Options, we have already helped hundreds of people to pool their collective investing power in order to arrange secured bridging loans via peer to peer lending. They have since gone on to enjoy the kind of returns previously only experienced by the very wealthy.
Most peer to peer bridge loans are taken as personal loans, which borrowers can use for a variety of purposes such as property development, construction and refurbishment or debt consolidation including the payment of VAT or inheritance tax. They can also be used for small business loans or to finance industries such as farming, hotels and even private landlords.
It’s important that you fully understand the implications of peer to peer bridge loans, just like you would with any form of finance and always take advice from a professional.
What are the benefits of a P2P bridging loan?
The two main benefits for the lender when investing in a peer to peer bridge loan is that:
- You don’t need to invest large sums of money up front and,
- that your loan is secured against tangible assets such as property at a conservative Loan to Value rate. This offers some security if a property falls in value however, it will not avoid your capital being at risk.
Other benefits to the lender include:
- The ability to be able to diversify your loan portfolio
- A sense of community or social good that you achieve when you lend to other peers
- A reduction in exposure if the market drops as your cash is only tied up for a short term period and not over a prolonged amount of time.
The benefits of taking a peer to peer bridge loan for borrowers, however, are no different to taking normal bridging finance in that:
- It is quick to arrange. There are less forms to fill in and the inefficiencies normally associated with traditional bank loans are bypassed due to a confidence in the exit strategy rather than the borrowers previous history.
- Credit checks are not compulsory.
- Highly flexible loans that are generally agreed on a case by case basis.
- Great repayment plans. Although bridging loans have higher than average interest rates when compared to longer term lending options; due to the increase in popularity for these types of loan; there are great rates and payment plans available.
At Bridging Options, our expert brokers scour the market to bring you the best short term interest rates available. Contact us today to discuss peer to peer bridge loans.
What are the drawbacks to peer to peer bridging loans?
As peer to peer bridge loans are a relatively new form of finance, it is important that investors know that their money is being utilised wisely. Likewise, borrowers need to know that their funding won’t suddenly fall through as they may be relying on their finances in order to bring projects forward.
In order to alleviate concerns, at Bridging Options we have put in place a number of measures to ensure that all parties have confidence in their finances.
As bridging loans are a riskier option for most lenders, they are generally offered at higher rates of interest (1-1.5% per month). There are also a number of additional charges which could prove costly for borrowers including arrangement fees, exit fees, repayment fees and legal costs, to name but a few.
At Bridging Options, however, we guarantee that we are always transparent with our rates and fees. For more information or advice then speak to of our expert advisors.
Why choose Bridging Options
At Bridging Options, we are able to connect borrowers with investors and have a range of peer to peer bridging loans that allow you to choose your own level of risk and reward. To find out just how much you are eligible to borrow, take a look at our easy to use bridge loans calculator and receive an instant, no obligation quote via your email or mobile.
We know that peer to peer bridge loans aren’t for everyone and it is therefore important that you discuss all of your financial options with our friendly and supportive team of brokers beforehand.
For a free, no obligation telephone consultation, call us today or complete our online enquiry form.