Private lending / Peer-to-Peer

Structural

Hi all.

Long time watcher decided its time to join in.

I wanted to pick peoples brains about private lending/ peer-to-peer. With the banks offering such low rates and peer to peer offering circa 8%+ would you look at a private peer-to-peer loan. (no I am not trying to set one up or anything else)

If you were approached by someone unknown who could offer a charge on property/land in exchange for a personnel loan, would you look a it? I have been sounded out by an acquaintance of a friend, he is looking at a large figure to do a house project but can offer a 1st charge to me on a land mass valued at 2.5x the loan amount. Or a second charge on a house with equity of 5x the loan.

What are the pitfalls if we get a solicitors contract drawn up? obviously him not paying but his accounts apparently show good earning. He cant use a bank due to current borrowings already in place.

Thanks for any advice.

S

MarkFromCornwall

It's risky. From what you say the bank considers the risk to be unacceptably high. Peer to peer websites reduce the risk to lenders by spreading it across a large number of lenders (for example I typically don't lend more than £20 to individuals on Zopa and businesses on Funding Circle). If your friend is a good risk then he will be able to borrow himself on a peer to peer site. If he isn't able to do so that would suggest they think he is high risk for them therefore high risk for you.