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FAQs

Have a question? We are here to help.

About Loanpad

Managing your account

About ISAs

Opening a Loanpad ISA

Managing your ISA account

Loans

Safety

What happens if…?

About Loanpad

Is Loanpad a peer-to-peer lender?

Technically, yes, as we allow you to earn interest through lending your money directly to borrowers through our platform. With our lending partners, we take care of everything – from finding and approving loans to managing them day-to-day and to collecting and distributing interest to you. Loanpad is easy to use, offers daily interest and is designed to minimise risk to your money.

What’s the difference between the Classic and Premium accounts?

There are only two differences: how quickly you can take out your money and how much interest you receive.

Our Classic account has a target interest rate of -% and you can withdraw money any time. Our Premium account has a target interest rate of -% interest and you have to give 60 days’ notice to take out your money (or pay an early access fee when available of up to 0.5% of the amount you’re withdrawing). Both accounts are available as an ISA, and withdrawals are always subject to funds being available. Interest rates may change.

Our ISA accounts may offer different target interest rates. Please see the FAQs about this below.

Who do you lend to?

We provide property finance to borrowers looking for shorter-term (3 to 24 months) property development, bridging or business funding. Our loans are typically shared with established lending companies (lending partners) and all our loans are supported by property, which means we have tangible security to sell if we need to recover the loan and repay our investors.

How do you structure loans?

Loans in the portfolio are typically shared between our investors and experienced lending partners. In rare circumstances, we may lend without the involvement of a lending partner.

How is my money invested?

Your money is spread over loans that are typically shared between our investors and experienced lending partners who take on the higher risk part of each loan for a higher rate of interest. To reduce the risk to you, we limit Loanpad investors’ share of every loan to an initial maximum of 50% of the total property value - and your money will be the first to be repaid if any borrower defaults on their loan. Read more about how we protect your money.

We may increase the loan to value to a maximum of 55% at a point in time when the borrower has stopped servicing interest on a loan and we consider there is no material risk of capital loss. This is to help ensure that investors continue to receive interest throughout the term of the loan.

Do you charge a fee?

No, we don’t. We make money by taking a small margin from the interest borrowers pay on their loans and, in some cases, by charging a fee to our lending partners. In other words, we earn money when you earn money. The only fee you might pay is to have early access to money in your Premium account.

What’s different about Loanpad?

We offer a combination of elements you won’t find on any other lending platform.

Daily interest: You can reinvest daily or withdraw monthly.
Unique protection: Loanpad offers a lower risk way to invest in property loans through loan-sharing, daily diversification, our Interest Cover Fund and more.
Simplicity: You can use our intuitive online platform to check your interest and our portfolio of loans daily, and you can move money between your accounts as much as you want.

Do we invest on our own platform?

Loanpad cannot invest on the platform as it is the platform operator and its role is to facilitate loans between lenders and borrowers.

However, one of Loanpad’s affiliate companies can and routinely does invest on the Platform as a lender. It invests on the same terms as any other investor. The only difference is that in the event of a platform wind-down the Loanpad affiliate company may withdraw its funds at the front of the queue as outlined further in our Investors Terms & Conditions.

Is Loanpad compliant with Jewish Interest Laws?

Yes.

Jewish Interest Laws prevent a person of Jewish faith charging or paying interest to or from another person of Jewish faith.

In order to make the platform permissible for persons of Jewish faith, to lend to / borrow from other persons of the Jewish faith, Loanpad uses a globally recognised solution, a “Heter Iska”, to enable any investment or transaction made only by a person of Jewish faith to occur without incurring the prohibition of charging or paying interest to another person of Jewish faith.

You can view a copy of our Heter Iska here.

Is Loanpad compliant with Sharia Law?

Loanpad wants to make its platform accessible to persons of all faiths.

We are are considering available solutions to enable Loanpad to be fully compliant with Sharia Law to enable Muslim faith lenders and borrowers to treat with each other without giving rise to the payment of interest.

Managing your account

Can anyone open an account with Loanpad?

You can open an account with Loanpad as an individual, through a legal entity such as a limited company or LLP, trust, pension fund or public body.

In all cases, you must meet certain eligibility criteria as outlined in our Investors Terms & Conditions.

How do I open an account?

The first step is to register and give us your basic details – name, address, date of birth and so on. To keep things simple, we’ll do online ID and background checks and only ask you for documents if we need more information.

Once you’re registered, you can open a cash account – this is a holding account where you first put money before moving it into an interest-earning Classic or Premium lending account.

You put money into your Loanpad cash account by making a transfer from the bank account details you entered when you registered. You’ll find our bank details and your personal reference number in the ‘Cashier’ section of your dashboard. As soon as your money arrives in your cash account and you have met relevant regulatory requirements, you can move it into an interest-earning account.

How can I put money into Loanpad?

You can do this in two ways:

  1. By making a bank transfer into your Loanpad cash account from the bank account details you entered when you registered.
  2. By setting up a standing order with your bank to make regular deposits into your cash account.

You’ll find the details to arrange both of these in the ‘Cashier’ section of your dashboard.

We process deposits into your cash account on weekdays only, excluding UK public holidays. Deposits are typically processed three times a day.

Please note we do not accept deposits by cheque.

Can I put money into Loanpad using a debit or credit card?

No, you can only move money into Loanpad through a bank transfer or standing order.

How much can I invest through Loanpad?

You can open both accounts with just £10 – and add to this in multiples of £10 – going up to £20,000 in a Classic account and £250,000 in our Premium account. (Please note: these maximum amounts may change.)

Upon request, we may be able to increase the Premium Account limit. This would be subject to a withdrawal limit of a maximum of £250,000 in any 60-day period.

We may offer certain investors the status of 'Liquidity Provider' to help maintain and regulate funds available for withdrawal. These investors are subject to mutually agreed supplementary terms.

How do I start earning interest?

By moving money from your cash account into either a Classic or Premium account – or into both. Money in these accounts will earn daily interest right away, and this is paid into your cash account each day. You can either leave it there, reinvest it in your Classic or Premium account, or withdraw it.

Choosing to reinvest means you’ll be earning compound interest (earning interest on interest), which is a powerful way to grow your initial investment much more quickly.

How do I set my interest preferences?

Interest and deposits are paid into your cash account. You can set your cash account to automatically invest funds (auto lend) or to pay funds into your bank account once a month (auto withdraw). You’ll find these settings under the ‘Preferences’ tab on your dashboard.

Auto lend – to maximise your returns just choose the account you want your funds to be reinvested in. Please bear in mind that transfers to your Classic or Premium account happen in multiples of £10, so your cash balance will only be reinvested once it reaches this amount.

Auto withdraw – to take your interest as income, choose the date you’d like your cash balance to be transferred to your bank account each month. You can only change your auto withdrawal date once every 30 days. Please note auto withdraw will transfer all funds in your cash account to your bank account on your auto withdrawal date.

Why do my preferences get turned off?

When you put money into your cash account from one of your interest-earning accounts, we turn off your interest preferences to stop these settings applying to this additional money, which you may not want. Just go into ‘Preferences’ and turn back on the settings if this happens.

Could interest rates change?

Yes, rates could go up or down. We monitor interest rates against the performance of the loans on our portfolio. If our rates do change, we’ll let you know 60 days in advance for the Premium Account and 7 days in advance for the Classic Account and clearly explain the reason for the change.

Do I have to pay tax on my interest?

This depends on your personal situation – it’s your responsibility to pay any tax you owe on interest you receive through Loanpad. We don’t deduct tax from your interest or any other money we pay to you.

The UK government guidance for individuals is that the interest received from peer-to-peer loans is taxable in the same way as any other interest received. Further details can be found in the UK government’s guidance on peer-to-peer lending.

If you have questions about paying tax, it’s best to get advice from an independent financial or tax advisor.

All of our accounts are available as Innovative Finance ISAs (IFISA), so if you’re eligible you could enjoy tax-free interest in this way. Tax treatment depends on your individual circumstances and may be subject to change in future.

Are there any restrictions to moving money between cash, Classic and Premium accounts?

In theory, no – and you can keep money in all three types of account. But there could be a short delay in moving money from your cash account to your lending accounts if there aren’t enough loans to invest in. It could also take a little longer to move money from your lending accounts to your cash account if we don’t have enough ‘free’ money in the system (either from new investors or repaid loans).

How and when can I take money out of Loanpad?

You can leave your money in Loanpad for any length of time – it’s completely flexible. If you ask to withdraw money from your cash account, we will aim to process this within one business day, although from time to time it may take up to 3 business days.

You must have money in your cash account in order to withdraw it to your bank account. This means you may have to transfer money from a lending account to your cash account first.*

*Important: We can’t guarantee being able to move or release your money from your lending accounts immediately, as this depends on having available funds from loan repayments and new investments. From time to time, there may be delays in moving or withdrawing your money, so it’s important that you view your Loanpad account as an investment and not like an easy access bank account.

Can I choose which loans I invest in?

No – we spread all investors’ money across our entire portfolio of loans daily. This is to protect your money and keep things simple and easy for you. Details of all loans are available on the platform (updated daily) and you can download a copy any time.

How can I keep an eye on my account?

You can check the ‘My account’ section of your dashboard any time to see the investment amount and interest you’re earning. You can also download an income statement for whatever period of time you specify.

You can also review the Loanpad portfolio of loans whenever you want – we update the details of our loans daily. We believe in total transparency, so if you don’t see the information you’re looking for, let us know at support@loanpad.com.

Why do I need to categorise my investor type upon opening my account?

In line with the peer-to-peer industry, we ask you to categorise your investor type when you log in to your account for the first time and annually thereafter.

You will be asked to categorise yourself as one of the following investor types:

  • Self-Certified Sophisticated: You have experience in peer-to-peer. For example, you may have made more than one investment in Loanpad. You may also choose this category for other reasons, even if you don’t have experience of peer-to-peer.
  • High Net Worth: You have annual income of £100,000 or more, or you have net assets to the value of £250,000 or more.
  • Restricted Investor: You have never invested in peer-to-peer or you have invested only once. “Restricted” means that you commit to limiting your investment in peer-to-peer until you have more experience.

We provide further detail on each investor type when you log in so that you can choose the most appropriate option.

What is the Appropriateness Test?

One part of the Financial Conduct Authority (FCA) rules is a requirement for Loanpad, in line with the peer-to-peer industry, to determine whether an investor has the necessary knowledge, experience and understanding of the risks involved in peer-to-peer lending.

All investors will need to complete a short Appropriateness Test before investing any funds. This will consist of a number of questions designed to assess your knowledge of investing in peer-to-peer loans.

You can take the Appropriateness Test at any time by logging into your Account.

It is important that all investors sufficiently understand the features, risks and benefits of lending with Loanpad. As such, we have designed our Appropriateness Test in line with that and provide background information on our website and before you take the Appropriateness Test to enable you to increase your level of knowledge if necessary.

You can take as much time as necessary on the Appropriateness Test and we would encourage you to read the background information along with the Invest page of our website together with the FAQs.

What emails will I receive from Loanpad?

We outline below the different categories of emails that you may receive from Loanpad.

Products & Services: Occasional emails designed so you receive the latest information on new products, feature announcements and platform changes.

Investment Accounts: Regular updates on interest rate changes, account limits, ISA deadlines and other investment account changes.

Loanpad Updates: General updates on Loanpad and its operations.

Blog / Newsletter: Our newsletter and blog posts.

Surveys & Feedback: Collecting your feedback in order to improve our services.

Investment Reminders: Reminders for money that is currently sitting in your Loanpad Cash Accounts.

Customer Journey: Reminders and notifications provided throughout your experience with Loanpad including account opening status.

Legal & Policy: Updates about changes to Loanpad’s Terms & Conditions and other legal documentation.

Transactions: Notifications about activity on your account such as deposits and transfers.

Profile: Notifications about personal details changes on your account such as address or bank account.

Please note, for legal and regulatory purposes, you are unable to unsubscribe from Legal & Policy, Transactions and Profile emails.

How do I close my Loanpad account?

Please get in contact with us at support@loanpad.com and we will commence the account closure process for you. Please note that before we can close your account, any existing funds must be withdrawn in full.

About ISAs

What’s an ISA?

An ISA, or Individual Savings Account, is a type of account that allows you to take income and profits free of income and capital gains tax.

Each tax year, the UK government allows people who meet certain conditions to invest a certain amount of their savings into ISAs. For the current tax year, the annual ISA allowance is £20,000.

The tax year begins on 6 April each year and ends on 5 April (inclusive) of the following year.

There are four main types of ISA available in the UK:

  • Cash ISA
  • Stocks and Shares ISA
  • Innovative Finance ISA (IFISA)
  • Lifetime ISA

Loanpad offers an Innovative Finance ISA, which we call the Loanpad ISA.

Tax treatment depends on your personal circumstances and may be subject to change in the future.

What’s an Innovative Finance ISA (IFISA)?

This type of ISA allows the interest you make through the loans on our platform to be exempt from tax (income and capital gains). The Loanpad ISA is a flexible ISA, so you can withdraw money and replace it in the same tax year without the replacement counting towards your yearly ISA allowance.

Can anyone open a Loanpad ISA?

You must be 18 or older and a UK resident (or in the diplomatic or overseas civil service or the partner of someone who is). You can only open one IFISA each tax year, and your Loanpad ISA must be within your £20,000 ISA allowance.

Can I open an ISA for someone else?

No, only for yourself.

How many ISAs can I have?

As many as you like. You can split your yearly allowance between different types of ISAs, but you can only subscribe current year's funds to one ISA of each type in each tax year.

You can move ISAs opened in previous years into an IFISA and also invest new funds in the same or a different IFISA – all in the same tax year.

Please see our IFISA investor key information document for more information.

How much can I invest in ISAs each year?

You can put up to £20,000 into ISAs in the current tax year. You can invest this in one type of ISA or spread it among different types, as long as you don’t invest more than £20,000.

This allowance doesn’t roll over – it starts again for each tax year. The amount may change in future - see https://www.gov.uk/individual-savings-accounts/overview for the latest information.

Does the yearly allowance include my ISA income (interest paid)?

No – only the money you originally invest in ISAs.

What happens if I go over the yearly allowance with my Loanpad ISA?

If you try to put more than your yearly allowance into your Loanpad ISA, we’ll pause the transfer and ask you to reconsider how much you want to invest.

Our calculations are based on the amount you’ve invested in Loanpad ISAs, so it’s important to keep track of your total ISA investments each tax year. If you think you’ve gone over the allowance, let us know straight away. You should also let HMRC know using the ISA helpline: 0300 200 3312.

You may have the pay tax on the interest you earn on the amount over the limit, and also possibly pay a fine to HMRC.

What tax year does the ISA application cover?

Your application covers both current and future tax years, as long as you invest in your Loanpad ISA each year. If you miss a year, the next time you want to put money into your ISA, you’ll have to fill in a new application form.

Should I open an ISA?

ISAs can be a great way to earn tax-free interest. But you should always make sure you’re investing in line with the government requirements for your own personal tax circumstances.

Loanpad cannot offer you independent financial advice as to your personal circumstances, and if you feel you need such advice before opening an ISA, you should consult an appropriately licensed independent financial professional for that advice.

What risks are associated with an ISA?

Holding your investment within a Loanpad ISA does not reduce the risks associated with that investment or guarantee returns. Please see our Risk Summary and the Invest or ISA pages for more information on these risks and the mechanisms we have in place to deal with them.

Opening a Loanpad ISA

How does a Loanpad ISA work?

For the most part, in exactly the same way as our standard Classic and Premium accounts – you just enjoy tax-free interest. There are differences in how you put money into your Loanpad ISA and how you take it out. Please see the FAQs about this below.

Holding your investment within a Loanpad ISA does not reduce the risks associated with that investment or guarantee returns. Please see our Risk Summary and the Invest or ISA pages for more information on these risks and the mechanisms we have in place to deal with them.

Tax treatment depends on your personal circumstances and may be subject to change in the future.

How do I open a Loanpad ISA?

Like all our accounts, you start by opening a Loanpad cash account. You can then open an ISA application by clicking on the ISA button on your dashboard.

Can I open a Loanpad ISA account without investing in a standard Classic or Premium account?

Yes. As long as you have money in a standard cash account, you can move this to an ISA cash account and from there to an ISA Classic or Premium account to start earning interest.

How do I put money into a Loanpad ISA?

There are three ways to do this.

1. By putting money in your ISA cash account
Once you’ve moved money into your Loanpad standard cash account from your registered bank account, you can move this to your ISA cash account via the ISA 'Cashier’ in your ISA dashboard. You can then start earning interest in a Classic or Premium ISA account by moving in multiples of £10, starting with just £10.

2. By transferring a current tax year ISA from another ISA manager
You can transfer as many existing ISAs to Loanpad as you like – money you’ve invested in any type of ISA in the current tax year. We won’t charge for this, although your other ISA manager may.

There are rules in place around these types of ISA transfers. One is that the transfer must be made directly between ISA managers – you can’t withdraw the money and make the transfer yourself.

Please see the FAQ about this below, as well as our IFISA investor key information document and our ISA terms & conditions for more information.

3. By transferring ISAs from previous years
You can transfer as many ISAs (of any type) from previous tax years as you like – and up to any amount. Like with existing year transfers, this must take place between ISA managers - you can’t make the transfer yourself. Your previous ISA manager may charge for the transfer.

The minimum amount for all ISA transfers into Loanpad is £500.

Why can’t I transfer funds from my standard cash account to my ISA cash account?

You may be trying to move more money than you have in your standard cash account or have gone over your ISA allowance.

Please change the amount you’re trying to transfer and try again. If you’re still having problems, please open up a live chat or email us at isa@loanpad.com.

How do I know how much I have left to invest in my ISA?

Your ISA dashboard shows how much you have left from the current year’s allowance. But this only takes your Loanpad ISAs into account, not any ISAs you may have opened with other companies. So, ultimately, it’s down to you to keep tabs on how much of your allowance you have left to invest.

Can I put money directly into my ISA account from my bank account?

No, you have to transfer the money into your standard cash account and move it from there into your ISA cash account, using the ‘Cashier’ section of your dashboard.

What’s an ISA cash account?

This is a holding account where your cash sits before you can invest it in our ISA Classic and Premium lending accounts. You earn interest only on money in ISA Classic and Premium accounts.

Do I earn interest on my ISA cash account?

No, only on investments. To start earning interest, simply transfer your money into an ISA Classic or Premium account.

What's the difference between the ISA Classic and ISA Premium accounts?

These work exactly like our non-ISA Classic and Premium accounts. You earn interest every day in both accounts: target interest rate of -% in the Classic and -% in the Premium account. You can withdraw money without charge daily from your Classic account, while you have to give 60 days’ notice (or pay an early access fee) to withdraw money from a Premium account. Withdrawing money from both accounts is subject to enough funds being available on the platform (i.e. not tied up in loans).

How do I start earning tax-free interest?

Once you have money in your ISA cash account, you start earning interest by moving it into your Classic and/or Premium lending accounts.

Can I invest in both the Classic and Premium accounts?

Yes. We’ve designed Loanpad to give you the best possible return on your investments and flexibility with your money.

Managing your ISA account

What are auto lend and auto withdraw?

These features work exactly the same way as in our standard accounts. Interest is paid daily into your cash account. You can set this to automatically reinvest (auto lend) or to be paid into your bank account once a month (auto withdraw). You’ll find these settings under the ‘Preferences’ tab on your dashboard.

How do I take money out of my Loanpad ISA?

You can do this any time, as long as your money hasn’t been allocated to a borrower or already loaned. The first step is to transfer your money from your Classic or Premium ISA account (or both) into your ISA cash account.

Important: We can’t guarantee being able to release your money immediately, as this depends on having available funds from loan repayments and new investments. From time to time, there may be delays in withdrawing your money.

Once your money is in your ISA cash account, you can move it to your standard cash account and from there to your registered bank account. ISA funds in your standard cash account are no longer technically in an ISA wrapper, and you may have to pay income tax on any subsequent interest.

Under the flexible ISA rules, you can replace the money you’ve withdrawn from your ISA without this adding to your ISA allowance, as long as you do this in the same tax year.

Will I be charged for taking money out of my ISA account?

Not unless you’re making an early withdrawal from your ISA Premium account. In this case you may be charged up to 0.5% of the amount you’re withdrawing. Please see our ISA terms and conditions for more details.

Can I replace money I’ve taken out of an ISA?

Yes. Under the flexible ISA rules, you can replace the money you’ve withdrawn from your ISA without this adding to your ISA allowance, as long as you do this in the same tax year.

Does moving money from my Classic or Premium account to the ISA cash account count as a withdrawal?

No. The money in your ISA cash account is still in an ISA but isn’t earning interest. It’s only seen as a withdrawal (no longer in an ISA) when you move money from your ISA cash account to your standard cash account.

Can I move money straight from a non-ISA Classic or Premium account to an ISA Classic or Premium account?

No, transfers from standard lending accounts to ISA lending accounts have to go through the cash holding accounts. So you’d need to move the amount you want to transfer from your standard Classic or Premium account into your non-ISA cash account, then from there to your ISA cash account and into an ISA Classic or Premium account. You can do this all with a few clicks in the ‘Cashier’ section of your dashboard.

Can I transfer an existing ISA to Loanpad?

Yes, you can do this any time. Transfers must be made directly between ISA managers – you can’t withdraw the money and make the transfer yourself.

All you need to do is print, complete and send us a Transfer Authority Form for each transfer you want to make – you’ll find this in the ‘Cashier’ part of your ISA dashboard. We’ll then contact your old ISA manager to handle the transfer directly. Your previous ISA manager may charge a fee for the transfer.

There are differences between transferring ISA money you’ve invested in the current tax year and ISA investments from previous tax years. There are also differences between the types of ISA you’re transferring, and there may be certain restrictions that affect how long the transfer takes. Having said this, we aim to complete all transfers within 30 calendar days.

Please see the IFISA investor key information document for more.

Do you charge for transferring an existing ISA to Loanpad?

No, but your existing ISA manager might.

Can I move my Loanpad ISA to another provider?

Of course. You’ll need to contact your new ISA provider, who will then get in touch with us to make the transfer. While we aim to complete all transfers within 30 calendar days, the timings will depend on your new ISA manager.

We do not charge a fee to transfer your Loanpad ISA to another ISA manager.

Can I cancel my ISA?

Yes, you can cancel your ISA within 14 days of the day you opened your ISA account.

It’s not possible to cancel when:

  • your money has already been allocated to a loan

or

  • we’ve already received the funds you’ve transferred to us from a previous year’s ISA

We’ll transfer any current year ISA investments you’ve cancelled into your standard cash account – and this will no longer count towards your yearly ISA allowance. If you want to cancel previous year ISA investments moved to Loanpad from another ISA manager, we’ll need to transfer these to another ISA manager.

Once the cancellation is complete, you’ll still be able to open another IFISA – with Loanpad or another ISA manager – or a different type of ISA with another ISA provider. And you’ll still have your yearly ISA allowance to work within.

If you close an ISA outside this 14-day cancellation period, it will still count as part of your yearly ISA allowance used.

What are the tax implications of having a Loanpad ISA?

All the interest you earn from your Loanpad ISAs will be exempt from income tax and capital gains tax.

The amount of tax you need to pay depends on your personal circumstances, and the rules around tax may change. If you’re unsure about how much tax you should be paying or whether a Loanpad IFISA is right for you, speak to an independent financial or tax advisor.

Do I have to tell HMRC about my Loanpad ISA?

It’s completely your responsibility to manage your taxes, including communicating with HMRC, filing tax returns and paying tax owed.
As your ISA manager, we’ll also keep HMRC informed on the status of your Loanpad ISA.

Loans

How do you structure loans to safeguard my money?

Typically, loans made with your money are shared with our lending partners – we only work with carefully vetted established lenders. They manage each loan with Loanpad oversight and are responsible for the higher risk part (called the ‘junior tranche’). The lending partners will always take at least 25% of the loan, meaning there’s lower risk to you if a borrower defaults. If this does happen, your money is repaid (plus interest) before the lending partner’s share.

This also means it’s in our lending partners’ interest to check potential borrowers very extensively, just as we do.

How do you decide whether to approve a loan?

We undertake stringent due diligence on each loan including a review of items such as:

  • The loan offer
  • A valuation report of the property
  • Supporting legal documents
  • Information on the borrower such as an asset and liability statement
  • Relevant reports from solicitors, surveyors and other professionals

We don’t just take these documents at face value. We assess the details carefully and may ask for more information about the borrower, the security and the strategy for repaying the loan. As circumstances can change, we also make sure we have an appropriate recovery plan in case of default.

What interest rate is charged on each loan?

The interest rate for Loanpad investors’ portion of each loan will depend on a number of factors including items such as prevailing interest rates and credit risk.

The interest rate charged will either be:

  • fixed for the term of the loan
  • variable with a minimum and a maximum depending on changes in the Bank of England Base Rate (or other relevant reference rate)
  • fixed for a defined period and variable thereafter

Interest will usually either be retained for the term of the loan or serviced on a monthly or quarterly basis.

You can view the interest rate charged on each loan in each Loan Report.

How do you define security values when assessing a loan?

When calculating the loan to value for our investors’ portions, we use a number of valuation metrics as part of our loan assessment process. The primary ones are explained below:

  • Open Market Value: The value of the property in a normal sale process
  • Open Market Value – 90 Days: The value of the property if it must be sold within 90 days i.e. in a forced sale process
  • Present Market Value: The value of the property during the planned works/development/build
  • Gross Development Value: The expected value of the property once the planned works/development/build has been completed
  • Gross Development Value – 90 days: The expected value of the property once the planned works/development/build has been completed if it must be sold within 90 days i.e. in a forced sale process

In many cases, we also take additional security such as a Personal Guarantee from the borrower.

How do you categorise loan risk?

At the start of a loan and at ongoing assessments, we allocate to each loan one of the following loan risk categories based on metrics such as the purpose of the loan, loan to value and probability of default. We define material adverse information as an item which we believe would result in a material risk of capital loss. You can see the assigned risk category for each loan over time in the Loan Reports.

To reduce the risk to you, we limit Loanpad investors' share of every loan to an initial maximum of 50% of the total property value - and your money will be the first to be repaid if any borrower defaults on their loan.

We may increase the loan to value to a maximum of 55% at a point in time when the borrower has stopped servicing interest on a loan and we consider there is no material risk of capital loss. This is to help ensure that investors continue to receive interest throughout the term of the loan.

Category 1: LTV under 35%. Bridging, development exit, refurbishment and / or property conversion loan. No known material adverse information on the loan or borrower.

Category 2: LTV between 35%-50%. Bridging, development exit, refurbishment and / or conversion loan. No known material adverse information on the loan or borrower.

Category 2B: LTV between 50%-55%. Bridging, development exit, refurbishment and / or conversion loan. No known material adverse information on the loan or borrower.

Category 3: LTV under 35%. Development loan. No known material adverse information on the loan or borrower.

Category 4: LTV between 35%-50%. Development loan. No known material adverse information on the loan or borrower.

Category 4B: LTV between 50%-55%. Development loan. No known material adverse information on the loan or borrower.

Category 5: LTV under 35%. Loan is suspended on our platform. Loanpad considers there is a material risk of capital loss and is in the process of conducting recovery action.

Category 6: LTV between 35%-50%. Loan is suspended on our platform. Loanpad considers there is a material risk of capital loss and is in the process of conducting recovery action.

Category 6B: LTV between 50%-55%. Loan is suspended on our platform. Loanpad considers there is a material risk of capital loss and is in the process of conducting recovery action.

How do you monitor loans?

Through our lending partners or directly, we stay in close contact with borrowers to ascertain the progress of any works and/or the refinance or sale process.

This may occur in a number of ways such as obtaining updated valuations, reports from monitoring surveyors, site visits, written updates, discussions with the borrower and photographic evidence.

How do you calculate Present Market Value?

Between the start and completion of a refurbishment, conversion or development, the security value will generally increase towards the Gross Development Value taking into account the progression of works, the amounts expended together with the developer’s profit margin.

Throughout the term of a loan, Loanpad will receive and review the progress of any works.

If there is sufficient evidence of works progression, Loanpad may increase the security value on an ongoing basis from the Open Market Value by the amount of the utilised drawdown facility and/or amounts expended by the borrower directly. We define this as Present Market Value. To remain conservative, we do not incorporate any developer’s profit margin into Present Market Value.

Towards the conclusion of a refurbishment, conversion or development (typically over 75% complete), Loanpad may calculate Present Market Value as Gross Development Value less the amount of the drawdown facility yet to be released or amounts remaining to be spent on the works.

When will you use Gross Development Value?

Upon material conclusion of the refurbishment, conversion or development, Loanpad may increase the security value to the Gross Development Value.

How do you define loan default?

When you invest in loans, there is always a possibility that some of them won’t be paid back on time. Delays in repayment of property finance are to be expected from time to time and can often be a result of logistical delays in securing re-finance, delays in development / refurbishment and / or the property sales process taking longer than expected.

In line with FCA regulations, we are required to define a loan in default where the borrower is past the contractual payment date by more than 180 days. At Loanpad, we also define a loan in default where the borrower has materially breached the terms of the loan and we are actively seeking full repayment.

It is important to note that default does not necessarily mean that lenders will incur a capital loss. All loans are backed (secured) by property that we can sell to recover lenders’ money if required.

To date, no capital losses have been incurred for any lenders.

How do you define the status of each loan?

We allocate each loan a status as outlined below which can be viewed at any time in My Loanbook:

  • Live: The loan is within its original term and in good standing.
  • Extended (No ICF): We have agreed to extend the loan and interest is either being serviced or is being covered by way of an increase in the loan for the extension period.
  • Extended (ICF): We have agreed to extend the loan and the Interest Cover Fund is servicing interest for the extension period.
  • Overdue (No ICF): The loan is now past the contractual repayment date and interest is either being serviced or is being covered by way of an increase in the loan for the extension period.
  • Overdue (ICF): The loan is now past the contractual repayment date and the Interest Cover Fund is servicing interest on the loan.
  • Default (No Suspension - No ICF): The loan is over 180 days past the contractual repayment date and/or the borrower has materially breached the terms of the loan but Loanpad considers there is no material risk of capital loss. Interest is either being serviced or is being covered by way of an increase in the loan until recovery action has completed and/or any loss has been crystallised.
  • Default (No Suspension - ICF): The loan is over 180 days past the contractual repayment date and/or the borrower has materially breached the terms of the loan but Loanpad considers there is no material risk of capital loss. The Interest Cover Fund is servicing interest on the loan until recovery action has completed and/or any loss has been crystallised.
  • Default (Suspension - No ICF): The loan is suspended on our platform. The loan is over 180 days past the contractual repayment date and/or the borrower has materially breached the terms of the loan. Loanpad considers there is a material risk of capital loss. Interest is being serviced or is being covered by way of an increase in the loan until recovery action has completed and/or any loss has been crystallised.
  • Default (Suspension - ICF): The loan is suspended on our platform. The loan is over 180 days past the contractual repayment date and/or the borrower has materially breached the terms of the loan. Loanpad considers there is a material risk of capital loss. The Interest Cover Fund is servicing interest on the loan until recovery action has completed and/or any loss has been crystallised.
  • Repaid: The loan has repaid in full.
  • Repaid (Impaired): The loan has repaid with a capital loss.
What’s the Interest Cover Fund (ICF)?

This is a ring-fenced fund designed to help maintain your daily interest payments. You can see real-time details of this fund on our platform at any time.

In order to help maintain your daily interest payments, we may first seek that interest is either serviced or is covered by way of an increase in the loan. If neither are possible, we may use the Interest Cover Fund but this is entirely at our discretion and is not a guaranteed payment.

We may also use the Interest Cover Fund to cover interest payments for short-term loan extension and/or recovery periods.

Whenever money from the ICF is used, it may be replaced and added to from a service fee charged to borrowers. This keeps the fund healthy and encourages prompt repayment of loans.

The ICF is designed to cover interest payments and associated costs of recovery / enforcement only (not money you have invested in loans) – and we can’t guarantee that it will cover any or all interest at any given time.

We provide further details on our dedicated Interest Cover Fund page and our Interest Cover Fund Policy.

The Interest Cover Fund we offer does not give you a right to a payment so you may not receive a pay-out even if you suffer loss. The fund has absolute discretion as to the amount that may be paid including making no payment at all. Therefore, investors should not rely on possible pay-outs from the Interest Cover Fund when considering whether or how much to invest.

Safety

Is my money safe with Loanpad?

While we do all we can to keep risk as low as possible, we can’t remove it completely. Accounts on peer-to-peer platforms such as Loanpad should be considered investments, and they do come with a degree of risk.

All of the money in Loanpad cash accounts is kept in a completely ring-fenced Barclays Bank UK account in line with FCA rules. This is kept completely separate from our day-to-day operations and your cash holdings would be returned directly to you if a platform wind-down is initiated or we were to go out of business.

Our lending process is designed to keep risk as low as possible. Please see answers to earlier questions for more details on our lending process.

Please note that Loanpad (in line with the peer-to-peer industry) is not covered by the Financial Services Compensation Scheme (FSCS).

What are the risks in putting my money into Loanpad?

While we do all we can to keep risk as low as possible, there are some risks to be aware of.

Please see our Risk Summary and the Invest or ISA pages for more information on these risks and the mechanisms we have in place to deal with them.

Please note that Loanpad (in line with the peer-to-peer industry) is not covered by the Financial Services Compensation Scheme (FSCS).

How do you protect my money?

We consider protecting your money to be our most important responsibility. We do this through a unique combination of mechanisms, including:

  • Only approving carefully vetted loans
  • Working with lending partners who typically manage the loans and accept responsibility for the higher risk part of the loan (the junior tranche), so that you take on lower risk
  • Spreading your money across our entire portfolio of loans, and reconfiguring this daily to decrease risk to you
  • Our Interest Cover Fund, designed to help keep interest payments in place if a borrower defaults on a loan
  • Securing all loans against UK property, so that there’s an asset to sell if we need to recover a loan
How do I know the money in my cash account is safe?

We keep any money that hasn’t been loaned in a ring-fenced Barclays Bank UK account, in line with Financial Conduct Authority (FCA) rules. This account is completely separate from our day-to-day operations, and neither we nor our creditors have any right to the money in this account.

What are wind-down plans?

As with any business, there is no guarantee that Loanpad can or will continue to operate forever.

As part of our commitment to you and in line with FCA regulations, we must take reasonable steps to ensure that we have arrangements in place to ensure that our loans continue to be managed and administered in the unlikely event that Loanpad initiates a platform wind-down.

These reasonable steps are called wind-down plans and are designed to help ensure that existing loans continue to be managed, monies are recovered from borrowers in a timely and efficient manner and then ultimately repaid to you as the investor.

Why are wind-down plans important?

We are aware that events in the industry have put an increased focus for investors on wind-down plans. There are two important aspects to this:

  1. The existence of an appropriate plan; and
  2. The costs implications for investors.

Wind-down plans protect you by helping Loanpad identify when a wind-down would be appropriate and provide a blueprint on how to manage the remaining loanbook until it is fully repaid.

What are the risks in the event of a platform wind-down?

The main risks you should be aware of in the event of a platform failure include:

  • Loans may cease to be managed and administered before they mature
  • A third party involved in the continued management and administration of loans after a platform failure may not be subject to the same regulatory requirements as the firm therefore reducing or eliminating regulatory protections
  • You may not receive some or all of your loan repayments
  • The likelihood that the majority of amounts due to you are those due from borrowers on live loans rather than from the firm itself, so in the event of a platform failure, these sums would not be immediately available
  • You may need to recover payments directly from the borrowers if there is no one managing the loans on behalf of all investors

As a result, robust wind-down plans seek to mitigate these risks and are critical in order to give all investors the appropriate comfort and safeguards that loans you are invested in will continue to be managed and administered in the unlikely event that Loanpad initiates a platform wind-down.

What is Loanpad’s wind-down plan and how will I be protected in the event of a platform wind-down?

To prepare for the unlikely event that a decision is taken to conduct a platform wind-down, we have a robust plan in place to manage the loans (alongside our lending partners) to ensure that the income generated from the loanbook is sufficient to cover the costs of managing the loans during the wind-down process.

As Loanpad earns money on a daily basis based on a margin of loans under management, it is able to use its daily income to cover relevant costs during a wind-down including ongoing provision of online account access.

One of Loanpad’s affiliate companies can and routinely does invest on the Platform as a lender. It invests on the same terms as any other investor. The only difference is that in the event of a platform wind-down the Loanpad affiliate company may withdraw its funds at the front of the queue as outlined further in our Investors Terms & Conditions.

Our cost base will reduce significantly during the wind-down period in areas such as staff and marketing and the wind-down team’s focus would be to manage the existing loans alongside lending partners and facilitate loan repayments as soon as possible.

We have incorporated into our analysis the reduction in Loanpad’s daily income as the loanbook is wound down and we also have capital set aside (which will be increased with the size of the loanbook) to help ensure that there are sufficient financial resources to conduct an orderly wind-down.

Our lending partners take on contractual obligations to investors /Loanpad in so far as management and reporting are concerned and combined with their “first loss / skin in the game” this is unlikely to be treated lightly even in a wind-down scenario.

Due to Loanpad’s business model, we expect to keep interest payments to investors in place at the prevailing rate and provide full access to investors online accounts during any wind-down process.

In the event that the anticipated costs to complete the wind-down exceed Loanpad’s daily income, we will reduce the rates of interest paid to investors accordingly to enable an orderly wind-down of the loanbook.

If you have a Loanpad ISA, your ISA would continue to work as normal and we’ll give you 30 days’ notice before we stop functioning as an ISA provider – and let you know about your right to transfer your ISA to another manager.

Please note that you would need to transfer your ISA to another ISA manager before Loanpad ceases to be an ISA manager for your account to remain within the ISA wrapper and tax-free.

Finally, please note that all of the money in Loanpad cash accounts is kept in a completely ring-fenced Barclays Bank UK account, in line with Financial Conduct Authority (FCA) rules. This is kept completely separate from our day-to-day operations and your cash holdings would be returned directly to you if a platform wind-down is initiated or we were to go out of business.

What changes will occur in the event of a platform wind-down?

In the event of a platform wind-down, there would be the following key changes in the way your Loanpad account operates:

  1. No new loans will be added to the platform.
  2. There will be no ability to manually request transfers into or out of your lending accounts. This is to ensure that remaining investors are not subject to an ever-decreasing level of diversification and are treated fairly.
  3. The interest rate for all accounts will be set to the prevailing Premium Account interest rate (i.e. there would be no difference based on which lending account you had invested in).
  4. As loans are repaid, funds will be distributed to investors and credited to your standard and/or ISA cash account as applicable. These funds will then be withdrawn to your bank account and/or you will be able to transfer them to another ISA manager.
How safe is my data?

We take safety of your data extremely seriously.

Our servers are fully cloud-based on the Amazon Web Services (“AWS”) platform. We always maintain a minimum of two geographically-separate servers to ensure our website remains active and new servers can be created almost instantly if required.

Our investor data is held in an AWS Aurora database cluster containing at least two identical versions of all our investor data. These versions are then further replicated creating a minimum of four copies of investor data at all times which are stored in a minimum of two geographically-separate locations.

We undertake a complete backup of all investor data daily and these are stored across geographically-separate locations. In addition, we can restore the investor data to any point in time on a rolling monthly basis.

How secure is Loanpad’s website?

We have a valid website SSL certificate from a globally recognised authority and we enforce a strongly encrypted connection for all users.

Our domain is rated A+ by SSL Labs and is not blacklisted by any anti-spam groups.

We use a range of Amazon Web Services (“AWS”) security measures such as port whitelisting and internal access controls.

In addition to strong password requirements, we require the use of Multi Factor Authentication for key account changes such as passwords and bank details.

Where can I see Loanpad’s Outcomes Statements?

To help you monitor the performance of the loan portfolio, we will publish an Outcomes Statement within four months of the end of each financial year, for us that’s 31 December.

The Outcomes Statement is a regulatory requirement by the Financial Conduct Authority (FCA). It is designed to help you monitor and understand the performance of the loan portfolio by showing expected and actual default rates by reference to risk categories and the actual return achieved against any target interest rate offered.

Loanpad’s Outcomes Statements can be found below:

2019
2020
2021
2022
2023

What happens if…?

What happens if a borrower doesn't make repayments?

There’s no guarantee that all borrowers will stay on top of their repayments, which is why there is some risk to the money you have invested with Loanpad.

If a borrower falls behind on their agreed repayments, we’ll take every possible step to collect the money owed. In most cases, this won’t affect your interest as it may be covered by way of an increase in the loan or our Interest Cover Fund may cover the missed interest payments to you. If you have a Loanpad ISA, your funds will remain in their ISA wrapper and the interest you earn will still be tax free.

Either directly or through our lending partners, we stay in close contact with borrowers. So we can usually see potential problems coming and advise borrowers on how to get back on track. Typical options might be the borrower extending the loan, refinancing with another lender, selling their property to repay the loan – or, in rare cases, we may take legal steps to recover the loan.

If it looks like a loan is in danger of not being repaid in full, we’ll remove it from our portfolio of live loans and ‘freeze’ the money you have involved in that particular loan. We call this a suspended loan. Because your money is spread across all loans daily, the impact of any one loan being suspended should be minimal to you. You may continue to receive interest through our Interest Cover Fund, and you can see any suspended loans under the ‘My Loanpad’ tab in your dashboard.

We’ll take steps to recover the loan through selling the borrower’s property (our security) and using the proceeds. Once this is done, we’ll ‘unfreeze’ and repay your share of the loan, plus interest. In the event that the sale of the security didn’t cover the loan, you might not get back all the money you had invested.

The Interest Cover Fund we offer does not give you a right to a payment so you may not receive a pay-out even if you suffer loss. The fund has absolute discretion as to the amount that may be paid including making no payment at all. Therefore, investors should not rely on possible pay-outs from the Interest Cover Fund when considering whether or how much to invest.

What happens if my ISA turns out to be invalid?

If we discover that your Loanpad ISA doesn’t satisfy ISA rules – for example, if you’ve gone over your yearly allowance – we’ll let you know straight away. We’ll first see if we can ‘repair’ your ISA to bring it in line with ISA rules – there may be a fee for this.

If this isn’t possible, part or all of your ISA will officially become ‘void’ and you may have to pay tax. HMRC will contact you to confirm the details.

The actions we may take if some or part of your ISA is invalid include:

  • Transferring all the money in your ISA account to a standard Loanpad account and closing your ISA account
  • Transferring some of your ISA funds (including the interest earned on this money) from your ISA account to a standard account
  • Transferring your ISA money (either all or some) back to your nominated bank account

It’s completely your responsibility for paying any tax or penalties due to HMRC if we discover you have an invalid ISA. We’re not responsible for this, or for any tax benefits you might lose, if we take the steps above.

What happens if have an ISA and move abroad?

You must let us know straight away if you leave or are planning to leave the UK.

Under ISA rules, you can’t invest in ISAs unless you’re resident in the UK. So you can no longer put money into an ISA after the tax year that you move, unless you’re replacing ISA money under flexible ISA rules. You can keep existing ISAs open and still enjoy tax relief on the interest you earn.

We’ll continue to accept your ISA investments until the end of the tax year that you move abroad. If we discover that you moved abroad previously and have invested in a Loanpad ISA while living abroad, we’ll move the related money (including interest earned) from your ISA account to your standard Loanpad account.

If you move back to the UK, you must confirm in writing that this is the case – and we may ask you to fill in a fresh application and investor declaration.

It’s your responsibility to be clear about your residency with both us and HMRC. You can find out more about this on the government website, including guidance on the statutory residency test.

What happens if I go bankrupt?

You should let us know straight away and send us a copy of the court’s bankruptcy order. Your estate will pass to a trustee, which we’ll also need details about – either directly from you (support@loanpad.com) or from the court.

We’ll close your Loanpad ISA on the date the trustee takes over – and will be guided by them from that time. We may also need to bring your membership of Loanpad to an end. You won’t lose the tax benefits you’ve already had on your earnings, but may not be able to continue receiving them.

What happens if I die?

If the worst were to happen, we’d wait for instructions from the person(s) who has Grant of Probate on what to do with your account.

If you have a Loanpad ISA, your account will be designated a ‘continuing account of a deceased investor’. This means that no more money can be added to the ISA, however, the ISA can continue to benefit from the ISA tax advantages during the administration period of the estate.

Any interest in a ‘continuing account of a deceased investor’ that arises (which in general terms means ‘paid’) after the date of death to the date of closure of the ISA is exempt from tax.

What happens if I need extra support?

From time to time, we all need some extra help to get something done, so we’re here for you when you need us most.

We know that extra support means different things to different people. All you need to do is contact us and let us know that you need some extra support and we’ll try to do what we can.

Please let us know if you have a specific requirement (for example, support by telephone instead of email or chat) and you can optionally tell us why you need extra support. You don’t have to tell us everything in detail if you don’t want to, as long as we have enough information so that we can help.

What happens if I am managing the estate of a bereaved investor?

If the worst were to happen, please get in contact with us at support@loanpad.com and our bereavement team can help guide you through the process.

What happens if I have power of attorney or similar for a Loanpad investor?

If you have the legal authority to make decisions on behalf of a Loanpad investor such as power of attorney or court of protection order, please get in contact with us at support@loanpad.com and our team can help guide you through the process.

What happens if a borrower dies?

Your Loanpad ISA will continue to work in the same way as your standard account and the tax status of your ISA will not be affected. Please see our main FAQs for more information about this.

What happens if I want to complain?

We hope you’ll be completely satisfied with your Loanpad experience. But if you’re not, and would like to complain, please email complaints@loanpad.com with details of your complaint and your Loanpad account number.

We’ll do our best to put things right for you straight away. If we haven’t managed to do this in eight weeks, you can refer your complaint to the Financial Ombudsman Service. We’ll give you information about how to do this both when we first acknowledge your complaint and when we send you our final response.

For more information about how we’ll handle your complaint, please visit www.loanpad.com/complaints-policy.

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