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How to make money as a buy to let lender
20 October 2014
If you are looking for higher returns from property investment, some new peer-to-peer buy to let lenders may be up your street.
Peer-to-peer lending is when a group of investors pool cash to lend money.
Some firms offer loans to individuals, but some are coming to the market who offer the same service to buy to let investors.
Investing can start from as little as £100.
Typically, borrowing rates are higher than mainstream buy to let mortgages so the peer-to-peer platform can take a cut and pass the rest on to the lender.
Investors can choose a ‘risk level’ and demand from around 3.5% to 10% returns on their cash.
Many lenders and buy to let indices are quoting typical returns of between 4% and 5% on a buy to let investment.
Although the rates are higher than bank interest rates, the money earned is paid gross, so has to be declared to HM Revenue & Customs (HMRC) on a tax return.
Landbay is one of the first lending platforms in the peer-to-peer buy to let market.
Low risk loans with lower yields are offered at the Bank of England interest rate plus 3% for a five-year tracker at 72% loan to value.
The company stresses:
• Lenders have first tier security against UK residential properties, all vetted and valued by a qualified surveyor and double checked by an independent panel
• Lending is restricted to experienced landlords
• Rent cover must be at least 125% of the monthly mortgage
John Goodall, Landbay’s chief executive, said: “We are very pleased to be offering the first peer-to-peer Tracker product, especially as increases in interest rates look ever more likely and potentially imminent. With banks continuing to pay very low and even declining rates to their savers, the launch of our new Tracker product is very timely and great news for Britain’s long suffering savers.”
“These new Landbay products offer lenders two distinct options to meet their specific needs and preferences and adds unique new power to the rapidly growing peer-to-peer finance marketplace in the UK.”