A Brief Introduction to P2P Investment
Hello and welcome to my P2P investment journal. I’m a normal UK guy with an interest in investment as a vehicle for living life.
In reality this means using any sensible investment route – and that’s my definition of sensible, for which I make no apology. Everyone has their reasons for investing and ideally an end point in mind.
Mine is pretty simple………whatever I make through lending money via PTP sites I intend to use to firstly provide income in semi-retirement and then, in 9 years, to contribute to paying off a mortgage. It’s an interest only mortgage with two different rates of interest due to the fact that a further advance was taken some years after the initial mortgage advance. The interest rates I’m paying are:
Mortgage Sub Account 1: Bank of England Base Rate of 0.25% plus 1.1% = 1.35% overall.
Mortgage Sub Account 2: Bank of England Base Rate of 0.25% plus 2.29% = 2.54% overall.
Total outstanding balance is £183,364.09
Along the way I’m going to share all my P2P investments along with my thoughts and decisions. I emphasise – MY decisions. You should and must make your own decisions and this site does not offer advice or recommendations of any sort whatsoever. YOU are responsible for all your own decisions!
A Different Way
This is a different way of providing an income and also paying back a mortgage. It’s the result of lots of thought about what is, for the majority of people, their largest financial commitment and a desire to gain an income without selling my time through working.
Almost everyone used to face the choice between a repayment mortgage and an interest only mortgage but these days the interest only option is becoming rare. So………25 years of monthly payments of several hundred pounds and the house is yours.
I think there might be a better way and this journal is my amateur attempt to catalogue my journey until the mortgage is due for redemption, which in my case is August 2026. So a shade over 9 years to provide some income and then generate a lump sum which will contribute to settling the bill for the house!
What do I need?
A good question. Although all of the outstanding mortgage balance won’t be paid off from P2P investment, any significant lump sum will certainly help a great deal.
My intention is to repay the whole outstanding mortgage when it becomes due on 10th August 2026, using the funds available from my PTP investments detailed on this site and funds within a Self Invested Personal Pension (SIPP).
Basically, the greater the funds available from P2P the less money I need to take from the SIPP and the less exposure to tax on withdrawal. I can control the tax payable on PTP very easily – perfectly legally and I’ll explain how I do this in a future post.
In terms of income………..the more the better but there has to be a view of the risks involved. More on that later.
What’s my starting position?
I’m currently invested in:
So currently that’s just 7.77% of the total lump sum requirement.
I’ll give regular updates on the latest position, money added, income generated & investment decisions, but first let me take you through the various investments and my thinking behind them.
This was perhaps the easiest investment since it’s solely based on an introductory bonus that they offer of £100 if you deposit a minimum of £1000 for a minimum of one year. This is on top of the interest rate of 3.5%. So, deposit £1000 and you effectively get an interest rate of 13.5% over a year. The year is up shortly so I’ll share the results when I have them.
Lendinvest is a P2P platform which invests solely in property via specialist finance primarily to property developers and investors. It’s a fascinating way to get involved in property, and significantly different to the buy to let route.
You can read more detail at LendInvest
What I like about it is the fact that I can reduce risk by diversifying across multiple properties. I’m currently invested in 24 properties at an average interest rate of 6.65%.
LendingCrowd is a P2P platform that invests in small established businesses. (These are not start-ups). Since I’m an entrepreneur at heart, I like the thought of business investing……..but this is not Dragon’s Den style where the lender is providing finance in return for an equity stake in the business (a share). This is lending money to the business (i.e. a bond).
Again you can reduce the risk via diversification. I currently lending to 69 different businesses at an average interest rate of 7.4%.
This is a modern day pawnbroker, lending money to individuals which is secured against valuable assets, such as property, diamonds, cars, boats etc. My view is that this carries more risk than the other platforms detailed above so I have less invested here and the interest rate is 13%.