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Bridging lender launches peer to peer arm to fund loans

Bridging lender Wellesley & Co is launching a peer-to-peer lending arm to fund its short-term loans and offering investors returns of up to 7 per cent.

Wellesley & Co says investors will earn between 5.5 per cent and 7 per cent a year depending on the length of their investment.

Peer-to-peer investors will see their money used to fund bridging and development property loans of up to £1m at an average loan to value of 62 per cent.

The lender will retain a portion of every loan and shareholders have committed £5m to match investors’ money.

Wellesley is also starting a provision fund with an initial £100,000 from shareholders to help protect peer-to-peer investors from any losses.

In the event of a default the security will be realised and sold with peer-to-peer investors paid first.

Not-for-profit firm The Open Data Institute estimates the UK’s peer-to-peer lending market has trebled in size in just three years. It is currently worth £550m and forecast to grow to £1bn by 2016.

Wellesley chief executive officer Graham Wellesley says it is targeting retail investors looking for better saving returns.

Brightstar Financial managing director Rob Jupp says: “The principle of peer-to-peer lending can be really useful in funding short-term loans. Lenders like West One and Montello are almost entirely funded by peer-to-peer lending. Investors just need to be sure the institution is a bona fide operation.”

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Comments

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  1. This is a great concept. Lots of costs are being avoided, with the use of technology. Probably less risky than dealing with some of the high street lenders. Peer To Peer Lending seems to have a much longer way to go in the current market conditions, of lack of lending and low returns on deposits.

    Anthony Badaloo is Financial Adviser at Church Hill Finance http://www.church-hill.net

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