Somo Review
Somo goes to unusual lengths to reduce risks when assessing borrowers. It also puts £1.2 million where its mouth is in taking first loss - of which there have been virtually none.
Somo’s Bridging Lending Account received an Exceptional 3/3 4thWay PLUS Rating.
These loans have been paying lenders 8.96%.
Visit Somo* or keep reading the Somo Review.
Somo is available to sophisticated/wealthy investors only
Before you read on, note that there’s a high minimum lending amount of £5,000 per loan.
Plus, to use Somo, you need to:
- Have an income of at least £100,000, or savings and assets excluding your own home worth £250,000.
- Or have been a director of a company with an annual turnover of at least £1 million in the past two years.
- Or been a member of a network or syndicate of business angels for at least six months.
- Or worked in the past two years in the private equity sector or in the provision of finance for small and medium enterprises.
What does Somo do?
Somo* does short-term property (bridging) loans, typically from £30,000 to £1.5 million, with the average around £200,000.
These loans are secured on your behalf, mostly against a residential property owned by the borrower for business reasons (so not loans against their own homes).
Some borrowers pay interest as they go and others pay all the interest at the end along with the loan itself.
The vast majority of the loans are planned to be for up to two years, but most loans are shorter than that. On average they’re repaid by the borrowers after 12 to 13 months, but two out of every five loans end up taking one year to five years to be repaid in full from the time the loans go live.
You might be first in line to be repaid in the event that recovering all the lent money becomes difficult. But more often than not you’re second or even third in line, behind other lenders.
When did Somo start?
Somo started doing loans through its online lending platform in 2014, although it provided borrowers with non-platform lending from 2010.
Total lending from 2014 has been £475 million.
What interesting or unique points does Somo have?
Somo has provided a large amount of historical data, access to key people, and responses to our queries and has maintained transparency with 4thWay for years now. It’s maintained attractive lending rates even as it’s grown, while maintaining its lending standards.
It approves a lot of loans, so you have many opportunities to lend in. One-in-ten loans take between one and four years longer to repay than expected, and yet lenders have reliably been paid back, including the interest due for the entire time the loans were outstanding.
Now, as we are many months into 2026, Somo has processed thousands of loans over a 12-year period with no losses to lenders, except losing some interest on eight loans.
Somo review: how good are its loans?
How much borrowers can borrow compared to their properties’ valuations
The maximum you’ll lend through Somo* on the vast majority of loans is 70%. Somo has approved loans up to 75%, but so far they’ve always been funded externally, i.e. not funded by lenders like you through the online lending platform.
70% is a tick up on the 65% Somo started at when it launched, but it’s still a solid maximum loan amount for these kinds of loans.
The overall average loan size compared to the property valuation is 58.70%, which is pretty much where it was in 2016, showing reassuring stability. This is somewhat on the lower (i.e. better) side compared to competing providers with similar quality loans.
Who gets repaid first if the property needs to be forcibly sold?
The split between senior and junior lending used to be around 50:50, but this has shifted quickly over the past year or two.
Now, in the live loanbook, for every £13 lent in loans where you’re first in the queue – so-called senior lending – you’re lending another £77 in loans where you’re not first (junior lending).
You’re currently looking at 7.59% lending rates on senior lending, with the average loan amount being just 52.79% compared to the property valuation, which is very low.
Recovery of your money in senior Somo loans is enforced through a first charge that is registered against the property. This is by far and away the best means to secure your place at the top of the queue if a borrower is struggling to repay all debts.
With junior loans, you’re second or sometimes even third in the queue to get your money back if the borrower’s property needs to be repossessed and sold.
For the additional risk of not being paid first, you’re currently earning more than about 9% on average.
The typical loan size of 61.93% of the property valuation is highly creditable for junior lending. The lender that is senior to you is typically a bank, but it can also be other Somo lenders.
The senior lenders hold an average 39.55% of the loan amount above you. That isn’t exactly a small share, but it’s also not huge, which would substantially increase the risks to you.
(Compare that with mezzanine development lending, for example, where the senior lenders above you might hold the first 60% to 65%.)
Tranching changes again who is repaid first
Your place in the queue is enforced in two ways: by a legal charge placed on the property by Somo on your behalf and through tranching that Somo does on its online lending platform.
A legal charge is normal. To give you a familiar example, if you own your own home with a mortgage, then your mortgage lender will have a first legal charge. It’s that charge that ensures your bank gets its money back first when the property is sold – forcibly or not.
Senior loans at Somo all come with first charges.
Junior loans are usually enforced through a second legal charge, which ranks behind the first.
However, Somo also sometimes splits loans into two tranches: A and B. Lenders in both tranches share the same legal charge, but tranche B lenders get paid a higher interest rate than tranche A lenders, in return for allowing tranche A lenders to get their money back first if the borrower can’t repay it all.
About one-in-five loans are split into tranches to cater for different lending risk appetites. E.g. a senior loan for £430,000 might be split into £230,000 and £200,000, with “tranche A” paying lenders 8.9% and tranche B paying 10.2%.
Tranche A lenders get the money they lent back first in the event the borrower is unable to repay in full. The full waterfall of payments – after Somo gets its fees – is:
1) Tranche A lenders get the amount they lent back.
2) Then tranche B get the amount they lent.
3) Then tranche A lenders get the interest owed to them.
4) Then tranche B lenders get their interest.
On very rare occasions, Somo offers you a third legal charge. In all the most meaningful ways, that’s very likely to pan out as the same as being in a tranche B with a second legal charge.
Bridging, but not development lending
All else being equal, it’s a lot easier to assess loans and contain the risks when doing bridging lending, like Somo does, versus property development lending.
Somo doesn’t do proper development loans, and yet borrowers can use the bridging loans for heavy refurbishments and other bespoke projects.
I’m pleased to see that in these cases Somo bases its lending decisions on the current property valuation, not the hoped-for future value after works are completed. This just makes the loans a lot easier to assess, and there are fewer risks for lenders along the way.
First-loss guarantee
Last year, Somo launched a first-loss guarantee on its loans that have second charges. This applies to all loans approved on or after 1st November 2025.
Seven out of every ten loans have a second charge.
If lenders are to lose any of the original money they lent on any of those loans, after the property has been repossessed and forcibly sold, Somo will take the first loss. It will pay you back up to 10% of the total amount lent.
So if the loan was for £200,000, Somo will pay the first £20,000 of any loss.
If losses on that loan are £50,000 (25% of the loan), it will reduce those losses to £30,000 (15% of the loan) through its guarantee.
If capital losses on that £200,000 loan come to just £15,000, it will take the full hit on that, as the losses are under 10% of the amount lent.
In real terms, this is the equivalent of lowering the amount you’re lending versus the property’s valuation by about three percentage points. So, if the loan is for 60% of the property’s valuation, the risk to you is as if you were lending about 57% of the valuation.
To understand why a 10% guarantee doesn’t lower an exposure at 60% down to 50%, you can read more in Somo Now Taking First Loss On Most Loans.
Three percentage points is not life-changing, but it can take a lot of the edge off and substantially reduce overall losses if the economy and the property market go through a severe downturn that particularly impacts Somo’s type of borrower.
More than that, the guarantee puts skin in the game for Somo – at least on second-charge loans.
The maximum that Somo will pay out for this guarantee is capped at £1.2 million across all loans, but I believe it’s extremely unlikely to get through that cap.
For the most part, Somo would need to pay this out of its own cash, not a segregated pool of money. But it’s currently a very wealthy business with more than enough in cash and other assets to pay out up to the cap.
The guarantee is subject to change at any time. Still, I expect Somo would have to answer to a judge if it went as far as to suddenly remove the guarantee if many outstanding loans suddenly suffer lots of unrecoverable bad debt.
How much experience do Somo’s key people have?
Somo* has proven itself over many years, and my assessment is that this family business has all of the relevant skills and experience we’d expect to see in property lending and bad-debt recovery.
It also has complementary skills, such as relevant legal backgrounds. The latter is nice to have, since legal matters are usually outsourced.
The team has been doing this kind of lending for more than two decades. I believe them when they claim to never have lost money on a loan, not even through the 2008-9 recession.
Somo has no specialists for quantitative risk modelling, but such modelling is unusual in this kind of lending.
Somo review: lending processes
Somo talked us through its lending processes, which are high-quality, professional and appropriate for these kinds of loans.
Its processes centre around looking for a margin of safety in worst-case scenarios and – very important for this kind of lending – a strong and realistic exit strategy for repaying the loan.
Fraud can be a problem in property lending, but clearly Somo has this very firmly in hand.
Somo goes far beyond the no-brainer techniques such as getting independent RICS valuations from insured surveyors. Its lending processes reveal a deep familiarity with all of the possible risks that can occur in this kind of lending, even long-shot risks. And it has these in mind when reviewing borrowers.
Indeed, the lengths its team goes to are beyond what I’m used to seeing in bridging lending.
That said, Somo’s overwhelming focus is on the quality of the property security rather than the quality of the borrower.
While this leads to a lot of loans falling behind schedule and even needing legal action, its bad-debt recovery processes kick in suitably quickly (indeed, aggressively).
Rapid action is an absolute necessity for these kinds of loans to reduce the risk of losses, and so Somo* has an impeccable record of paying lenders in full.
You earn interest while waiting for the bad debts to be recovered. This is important, because, despite acting quickly, getting the recovery can sometimes take a very long time.
How good are Somo’s interest rates, bad debts and margin of safety?
Somo lenders are currently earning 8.96%.
Over many years, lenders have lost just a very small amount of interest to bad debts, imperceptibly impacting the overall return. Lenders have lost virtually none of the money they put into any loan.
At the same time, lenders have been paid out over £33 million in interest.
A super important question for 4thWay to look into is always whether a provider is kicking the can of bad debt down the road by extending loans and re-lending to borrowers. That would lead to a massive collapse for lenders at a later date.
I’m glad to report it has not been doing so.
We conduct stress tests based on those that global banks are required to do, but to a tougher standard. These tests calculate what might happen to lenders putting their money in today if there was a sudden, severe recession and major property crash.
In so doing, we find that Somo lenders who start lending today and who spread across lots of loans and keep lending for two years are still very well protected from the risk of losses.
The returns offered by Somo are therefore attractive versus the risks, which is why Somo continues to earn the calculated top 4thWay PLUS Rating of 3/3, “Exceptional”, as it has done for some years.
Behind those stable results, some movements in the underlying calculations are noteworthy.
Firstly, there are now many more junior loans, which increase the risks. But I find that this is pretty much equally offset by two other things.
One of those things is the new capital guarantee.
The second is that Somo’s lengthier history now gives us more confidence that losses on bad junior loans even in a serious disaster period will be lower than we have previously been forecasting.
Nevertheless, 4thWay will watch carefully for further developments.
The 4thWay PLUS Rating is forward-looking, which means it factors in the capital guarantee, which is in loans approved in November 2025 and later.
Even so, we have also conducted the 4thWay PLUS Ratings calculations based on older, outstanding loans that are not covered by the guarantee. We find that Somo would still earn the top 4thWay PLUS Rating on those, just as we found last year before the guarantee was introduced.
Furthermore, on those older loans it would still keep its current 6/10 4thWay Risk Score. That score, unlike the 4thWay PLUS Rating, factors in only the potential scale of losses from bad debts in a disaster and doesn’t offset it with potential interest earned.
This means that lenders – whether starting now with more junior lending and the guarantee, or having started earlier and therefore lending in more of a mix of senior and junior prior to the guarantee – shouldn’t expect to lose as much as 15% (before interest) in total in a sudden severe property market crash and major recession. Interest earned on loans you lend in, or re-lend in, over a two-year period should cover it, even in that scenario.
Has Somo provided enough information to assess the risks?
Somo* provides 4thWay with sufficient access and information for us to assess it on an ongoing basis, including detailed data on every single one of its loans.
Somo gives 4thWay access to its key people for interviews.
Recently Somo has been a lot slower to respond to written questions when reassessing it and in some cases hasn’t responded at all.
While I don’t currently see this as a problem and think it’s more to do with them being busy, it’s something I’ll need to watch and interview them about during the next reassessment.
When it comes to providing information to you lenders directly, unfortunately you have to sign up, log in, click on its logo and then scroll to the bottom of the page. And that’s even in order to see its basic lending statistics – as well as the website’s lender FAQ page!
On getting registered, you get see a summary of the loans, the loan valuation report and a few other documents when choosing loans to lend in.
Your position in terms of when you get repaid is also made clear, e.g. if you are lending in tranche B, sharing the same legal charge as lenders in tranche A.
Through the online portal, existing lenders get some updates particularly on bad loans in recovery by clicking on the loan, then the “loan updates” tab and scrolling down. Bad debt updates are at least once a month.
Its website statistics for lenders are primitive and often out-of-date but still of some use to you. Somo should provide a lot more information on its people to its website users as well.
Is Somo profitable?
Independently audited accounts from Somo* show that it has made large profits for many years. That’s between £3.9 million and £5.1 million over the past five years.
(In 2025, there were additional profits of £14 million on top of that, but they were for extraordinary reasons, so it’s best to ignore those.)
That sort of record is still unusual in this industry, where many companies are only now beginning to show smaller profits.
I don’t know the auditors, but it’s always good to see that an auditor has given a clean bill of health.
What can you tell me about Somo’s cybersecurity?
Somo’s website security is in great shape, according to information provided to 4thWay by Sucuri. It finds no known malware, website errors, out-of-date software or entries on blacklists.
Somo’s website is listed as clean by Google Safe Browsing, McAfee and Yandex. The website is secure and carries a valid security certificate, helping to protect you when you supply your personal data. It has a firewall in place, which helps to block outsiders getting access to the data Somo holds.
This assessment is not based on a full attempt to penetrate the website’s security but rather on arm’s-length tests.
Is Somo a good investment?
Wealthier lenders should feel reassured by Somo’s exceptional record, experienced team, and its rapid, successful response to problem loans. I certainly think Somo* is a good investment if you put your money in lots of loans.
What is Somo’s minimum lending amount and how many loans can I lend in?
Somo is very exclusive, with a high minimum of £5,000 per loan.
You choose all your loans yourself. Somo has been approving around 30 property loans per month for the past few years, so I expect it will be easy to build up a portfolio of loans quickly.
Does Somo have an IFISA?
Somo does not have an IFISA.
Can I sell Somo loans to exit early?
You can sell your loan parts to other lenders or to Somo, if either are willing to buy, through its online secondary market. Somo* makes no charge for this.
You can list your loan parts for sale for the full amount. Alternatively, if you want, you can sell your loans for a discount. E.g. if you want to sell a £10,000 loan part, you might try to speed up the sale by offering it for £9,800.
Somo has a great record of enabling a very swift sale, but you just have to realise that this will not always be the case.
You absolutely have to understand that at some point your money is likely to be tied up for longer, because that is simply the nature of money lending. That is even the case at high-quality online lending providers, since market forces are not under their control.
If you can’t live with that, you should lend less money or none at all.
Lending costs
Most providers argue that lenders pay no fees, and Somo takes the same position.
However, I assess your true costs in the same way that I previously used to assess costs in investment funds. (And fund analysts to this day still continue to do the same.)
To that end, 4thWay’s specialists look at what the borrower is paying in order to borrow money from you (the fees and interest). We then convert all the fees and interest into an annualised rate, deduct from that the annualised amount that Somo passes on to you, and then the difference is Somo’s cut.
The larger the cut, the less downside protection you have and the lower your lending returns.
I find that the costs are reasonable for these kinds of loans, considering the large amount of human effort required in pulling in borrowers and assessing them, as well as taking care of problem loans.
I estimate lending costs are around 7.4% of the loan amount. These all-in costs compare reasonably well to Somo’s most similar competitors.
What more do I need to know?
Unusually in this wider industry, online direct lending through Somo* is not regulated by the Financial Conduct Authority or any other authority. You’re also not likely to be able to complain to the Financial Ombudsman Service.
Somo is what 4thWay would define as “peer-to-peer lending”, because the risks are effectively approximately the same as direct lending to the end borrower, but our definition is not the same as others’. Read about Somo’s structure here.
Somo’s structure and lending contracts are such that, for tax purposes, you won’t be able to offset any losses at Somo with gains at other P2P lending companies, and vice versa.
However, interest is technically paid to you from a trust. I’m not an accountant, but I think it’s therefore likely that lending through Somo qualifies you for three tax breaks: the income-tax personal allowance, the starting rate for savings and the personal savings allowance. Read more on those in How Does Peer-to-Peer Lending Tax Work?
Thank you for reading the Somo Review! Visit Somo*.
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The 4thWay® PLUS Ratings are calculations developed by professional risk modellers (someone who models risks for the banks), experienced investors and a debt specialist from one of the major consultancy firms. They measure the interest you earn against the risk of suffering losses from borrowers being unable to repay their loans in scenarios up to a serious recession and a major property crash. The ratings assume you spread your money across hundreds or thousands of loans, and continue lending until all your loans are repaid. They assume you lend across 6-12 rated P2P lending accounts or IFISAs, and measure your overall performance across all of them, not against individual performances.
The 4thWay PLUS Ratings are calculated using objective criteria that can be measured and improved on over time, although no rating system is perfect. Read more about the 4thWay® PLUS Ratings.
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