HNW Lending Review
Here is the most recent HNW Lending review from one of our experts.
4thWay's Quick Expert HNW Lending Review
4thWay's Quick Expert HNW Lending ReviewA “swinger” with a high number of very secure loans and first loss usually paid by its directors
HNW Lending Review: their best-rated product
HNW Lending's Property & Asset Loans Under 50% Average LTV received an Exceptional 3/3 4thWay PLUS rating
This account has been paying 8.74% interest.
Read about the 4thWay PLUS Ratings, compare more peer-to-peer lending accounts or visit HNW Lending*.
When did HNW Lending start?
HNW Lending has completed £91 million across 400 loans since 2014. Most of its loans are property loans, although it also completes loans against expensive cars or other items.
What interesting or unique points does HNW Lending have?
At least one HNW Lending* director co-lends in almost every loan, taking the first loss of at least 10% on over half of them. If a loan goes bad and it cannot be fully recovered, the first thing that will happen is that the directors lose their share before anyone else suffers any consequences.
HNW Lending frequently offers loans that are a fraction of the valuation of the property security and lenders can ask for personal updates on their own loans by emailing kim@hnwlending.co.uk.
HNW Lending and the regulator
HNW Lending recently re-launched lending after a temporary pause over the summer. It voluntarily agreed with the regulator to stop lending while it improved its marketing and procedures. The regulator agreed it could restart all aspects of its lending operations again at the end of October 2020. Read more about what changes the regulator required in our original report here.
HNW Lending during COVID-19
Due to both the pause agreed with the regulator and the pandemic, HNW Lending has approved very few loans since March. It's told us that more new loans are coming in the last few months of 2020.
Turning to existing lending, many borrowers hit by the pandemic have been unable to repay, at least temporarily, or have asked for forebearance. Outstanding bad debt is currently double the amount in normal times. But the properties the borrowers own still back the loans and the average loan size is very low. And HNW Lending has almost invariably, ultimately, recovered bad debts in full up to this point, as its closed off years show. Lenders continue to earn interest on loans even if they are late for payment.
Critically, this sort of event is expected for loans of HNW Lending's type and the security and interest rates are sensible for covering the risk.
How good are its loans?
HNW Lending can be loose in how it selects borrowers where it appears that property or items are clearly worth a lot more than the loan. This helps it find more loans to pay decent interest rates but can also lead to some losses. That is what we call a “swinging” P2P lending site.
On average, with HNW Lending's senior loans, borrowers borrow just £43,000 for each £100,000 in the property that they put up as loan security.
Borrowers are all wealthy “high-net worths” that tend to have a lot of property and other expensive possessions, but little cash. This means that loans can go bad quite often but there is a high prospect of recovery.
How much experience do HNW Lending's key people have?
Its key decision maker has a decade's experience. He comes from a property background that is alternative to the usual route, although still involving reasonably similar skills and experience to those we would usually expect.
HNW Lending review: lending processes
Its processes tick all the boxes for this kind of lending, provided you accept that it is supposed to have a high proportion of loans that go bad – at least for a time.
It mostly sticks to property or items it understands with a maximum loan of 70% of their value; independent assessments are made when appropriate; items are stored securely and insured; borrowers pay interest monthly or in advance; and bad debts are quickly spotted and rapidly acted upon. The latter is far from a given in peer-to-peer lending of this kind, but vital to ensure that recovery of bad debt is usually successful.
The focus is on accepting property security and borrowers where recovering bad debt is easy, so there have been no losses for lenders to date.
How good are HNW Lending's interest rates, bad debts and margin of safety?
A high number of loans go late or go bad, as is usual for this kind of lending to wealthy borrowers rich in property but low on cash.
But, while this can lead to delays, the usual expected result is recovery of the bad debt – complete with additional interest. For example, no loans made in 2014 and 2015 have any remaining late payments or bad debts, despite the fact a good number of those loans went bad at some point, as they were expected to do.
If you use HNW Lending's auto-lend, in addition to the first-loss feature, you benefit from a reserve fund to cover additional bad debts. However, we do not know if the fund is large or small, and it's uncertain whether this fund is entirely protected and segregated entirely for lenders' benefits.
Interest rates appear fantastic for the risks involved in HNW Lending's loans. The margin of safety is therefore very good, provided you spread your money out across a score or more loans to contain risks.
Has HNW Lending provided enough information to assess the risks?
HNW Lending* is transparent with 4thWay, sharing a great deal of information with us. Although it can contain errors, it is quick to respond to our questions. It's history is deep enough for our full risk-modelling techniques (enabling us to assess it for a PLUS Rating).
While 4thWay gets detailed information, it should however provide much more detailed statistics on its website directly to potential lenders, particularly on the proportion of outstanding bad debts, so that lenders can better understand the types of loans they are getting into. (See 4thWay's detailed comparison pages for more detailed statistics on HNW Lending's bad debts.)
Is HNW Lending profitable?
We have limited information on the financial health of this P2P lending company as it is too small for full, audited accounts, but it states it's profitable, and its founders and shareholders are high-net worths themselves, currently lending over £2 million in the same loans as everyone else.
What is HNW Lending's minimum lending amount and how many loans can I lend in?
If you want to pick individual loans yourself, it’s very exclusive, with a high minimum of £10,000 in each loan you lend in. However, if you put £15,000 into HNW Lending's IFISA, the minimum you can lend is reduced to “just” £5,000 per loan.
Alternatively, you can use auto-lend, which currently spreads £10,000 (or £5,000) across more than 40 loans, with a maximum of 10% of your money in any one loan.
Independent opinion: the opinions expressed are those of the author(s) and not held by 4thWay. 4thWay is not regulated by the ESMA or the FCA, and does not provide personalised advice. The material is for general information and education purposes only and not intended to incite you to lend.
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