What’s the real risk? Seeking alternative finance or staying with traditional lenders?

The alternative finance sector is disrupting traditional finance

Marketplace lending, also known as crowdfunding, non-bank, and peer-to-peer lending (P2P), is an alternative to traditional financing options.

Marketplace lending is a compelling proposition for borrowers and investors. The sector grew rapidly in the wake of the financial crisis, driven by a combination of banks restricting lending and the rapid development of the underlying financial technology. This enables efficient matching of lender and borrower and tracking of their loans.

CrowdProperty specialises in marketplace lending specifically for property projects, matching borrowers (SME property developers) and wholesale investors to fund property project loans via a purpose-built, specialised technology platform.

In an environment of low interest rates for cash savings, and although less secure than straightforward cash savings, marketplace lending like CrowdProperty has the potential to offer wholesale and professional investors — investors who are aware of the risks* — better target income returns than some traditional options. This can happen through fundamental efficiencies:

  • Removing inefficiency from the market — putting borrowers and lenders together (taking out the middlemen)
  • Lowering overheads by not requiring branch networks, real estate, legacy IT systems, plus all the other operating costs
  • Pooling investments to make them work harder and generate higher returns — usually only available to institutions

That’s also why marketplaces combine arguably more attractive lender rates without eye-watering repayment rates and fees for their borrowers, making it more attractive to property developers.

The advantage of marketplace lending to investors is that the loan can be secured by first mortgage against residential property. This protects investors’ capital and interest as CrowdProperty can step in and take control of the asset if a loan defaults.

CrowdProperty offers up to 7% p.a. target income returns* on first mortgage secured loans.

Your next steps

Register with CrowdProperty or get in touch with questions.