Landbay gives both investors and borrowers the opportunity to benefit from the British property market, either through investment or direct ownership. The platform connects people applying for a buy-to-let mortgage to investors, and means all loans are secured by real-estate.
Landbay has been successful so far and in 2015 was voted as one of the most disruptive start-ups in the UK.
Continue reading to find out more about the peer-to-peer lending platform.
Who is Landbay?
Landbay was founded in 2013 by economist John Goodall and property finance analyst Gray Stern. Since its inception, it has had a very promising start, and as of 2015, Landbay was the fastest-growing peer-to-peer platform in the UK.
Landbay is a member of the P2P Finance Association and the Council of Mortgage Lenders. The company is also authorised and regulated by the Financial Conduct Authority.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
How it works
As an investor, the process is as follows:
Register: Register for an account on the Landbay site
Chose: Chose which investment product you would like to invest in
Invest: Invest how much you would like, and Landbay will automatically diversify your investment across multiple loans
Earn: Interest repaid on the loans will be passed on to you, and you can chose to withdraw or reinvest it
For borrowers, the process for applying for a buy-to-let mortgage is:
Apply: Apply for a buy-to-let mortgage from Landbay
Filtered: Landbay’s mortgage brokers will filter applications to identify who to pass on to the underwriting team
Credit check: The underwriters scrutinise each claim, giving a decision in principle within 48 hours
Valuation An independent RICS surveyor is sent out to inspect and value the property
Matching: Once approved, the mortgage is matched to investor funds, and starts earning interest
Repayments: The borrower earns rent and makes interest repayments to Landbay, until the mortgage is settled
Benefits to investors
As an investor, you have the option to chose how much you would like to invest and in which investment product. Some of the benefits include:
Your investment starts earning interest within 24 hours of receipt of cleared funds
No investment fees
Investment is automatically diversified
Monthly repayments you can withdraw or invest
Sell your investment any time on the secondary market
Protection from default from Landbay’s Reserve Fund
What's a Reserve Fund?
A Reserve Fund is put in place to protect investors from loan defaults.
Landbay retain a proportion of their fees, and keep this pot of money separate as the Reserve Fund. If a borrower defaults on their mortgage or if they miss repayments, the fund will be used to cover the loss of income for investors.
Benefits to borrowers
As a borrower, you are using your Landbay loan to fund your buy-to-let property. Some of the benefits include:
Decision in principle in 48 hours
Tailored decision based on your circumstances
Simple fee structure
Low interest rates
Hassle free application process
Criteria
To apply for a mortgage from Landbay, you, your finances and the property need to meet a certain set of criteria:
You:
Aged 21 or older
Have a UK credit footprint
No adverse credit in the last 24 months
Earn a minimum income of £25,000 a year
Are applying for a buy-to-let mortgage
Your finances:
Need a buy-to-let mortgage between £50,000 and £1,000,000
You have a minimum deposit of 25%
Satisfy the income and affordability thresholds
The property:
Is in England or Wales
The property value is at least £80,000
The property must be suitable for letting at completion
Frequently Asked Questions
Minimum documents required for making an application are:
Fully completed and signed application form
Proof of ID
Proof of current address
Bank statements
Proof of income
Further documents may be required on request.
The minimum amount you can initially invest in Landbay is £100. There is no maximum on the amount you can invest, but Landbay can only accept debit card payments up to £20,000. If you want to invest more than £20,000, you will have to do multiple transactions or invest via bank transfer.
The secondary market is a mechanism which allows investors to sell the loan parts they are invested in. This allows investors to get out of loans when they want, provided their loans clear on the marketplace.
If you are not a professional investor or institution, you should seek appropriate advice from a professional adviser about lending through peer-to-peer platforms.
Chris Lilly is Head of publishing at finder.com. He's a specialist in personal finance, from day-to-day banking to investing to borrowing, and is passionate about helping UK consumers make informed decisions about their money. In his spare time Chris likes forcing his kids to exercise more. See full bio
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