First P2P buy-to-let mortgage launched

First P2P buy-to-let mortgage launched

A peer-to-peer lender has launched the industry's first crowd-funded buy-to-let (BTL) mortgage, which will help to provide funding for overseas investors who currently struggle to.

A peer-to-peer lender has launched the industry’s first crowd-funded buy-to-let (BTL) mortgage, which will help to provide funding for overseas investors who currently struggle to secure mortgages on UK property.

Assetz Capital, part of the Assetz group of property investment sourcers and advisers, is currently offering borrowers crowd-funded loans at up to 50 per cent LTV, which charge a rate of seven per cent across a five year term and incur a 3 per cent arrangement fee.

The product, dubbed “Lend-to-Let”, allows investors to benefit from an annual return of 6.5 per cent for the duration of the loan, gaining 0.5 per cent cash back in the first year.

Those who fund the loans do not face any investment costs, risk any charges on their yield, save income tax, or face the danger of capital loss.

Assetz also holds a first charge over the property in question on behalf of the loan’s funders, with any rental income placed into a trust account which the owners can draw upon for repairs.

The lender has also pointed out, however, that the product suits a specialist investor, as it promises no capital growth, requires a minimum term of five years and levies income tax, payable on any income gained through the investment.

Assetz has said that it hopes to tap into strong demand from high net worth investors who live abroad and would like to invest in UK property, yet are unable to access mainstream mortgage funders as they are not British citizens.

The Stockport-based lender outlined a comparison of investment returns on a typical property worth £100,000, with a standard investment period of five years.

Though a standard BTL product would return £35,800 on a £50,000 investment, it also levies hefty exit costs of £3,800, delivering a total net income of £3,200 per year along with a significant rate of capital growth.

Assetz’s product, however, provides a £16,250 return for the same investment after five years, yet requires no exit costs or mortgage charges throughout its duration.

Stuart Law, Chief Executive of Assetz Capital, said: "The launch of Lend-to-Let represents an exciting new direction for the UK buy-to-let market, as well as the growing peer-to-peer lending sector. By bringing the two together we are able to plug a huge gap which has prevented good quality, high net worth individuals from investing in the UK property market since the withdrawal of lenders from this sector.”

He added: "This mortgage will meet this demand, while at the same time offering strong returns with added security for peer-to-peer lenders. It could have a significant impact on the UK buy to let market, particularly in the North of England where the loan is underpinned by exceptionally strong rental yields of typically eight per cent gross."

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