HNW Lending Review
Directors take first loss of 10% and the interest paid out on closed loans has been 25 times losses - yet lots to understand before lending.
HNW Lending’s Manual Lending Account, averaging 48% of the valuation of the borrowers’ properties after directors taking first loss, received an Exceptional 3/3 4thWay PLUS Rating.
That lending account is paying around 9.01% interest before losses.
HNW Lending’s Auto Invest Account pays 7.00% with additional borrower interest that has so far fully covered losses. This account also has the 3/3 4thWay PLUS Rating.
The minimum lending amount is high at £10,000 (£5,000 in the IFISA), although you can choose to spread this automatically across at least 20 loans (usually a lot more).
Visit HNW Lending* or keep reading the HNW Lending Review.
When did HNW Lending start?
Lending has hit £163 million across more than 550 loans since 2014.
Most of HNW Lending’s loans are property loans, particularly short-term bridging 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, now taking the first loss of 10% or more in most loans.
If a loan goes bad and it can’t be fully recovered, directors lose their share before anyone else. They currently lend nearly £4 million out of the £34 million outstanding, which is a large amount of skin in the game.
In the past, a director has sometimes bought lenders out of some loans that were in trouble, but he doesn’t always do so.
4/10 loans are for less than half of the property valuation, after first loss. Lenders who spread their money equally across all of those loans are earning 8.36%.
It’s a roller coaster for lenders, however, as huge numbers of loans suffer problems. It takes a long time for them to be recovered – although ultimately recoveries have been exceptional to date.
Lenders get unusually personal service: you can ask for updates on your own specific loans by emailing kim@hnwlending.co.uk.
How good are its loans?
Borrowers are typically property-rich but cash-poor. They put up valuable properties as security, often valued around twice that of the loan amount, and then over a third of borrowers suffer problems repaying on time. Often, vicious court battles ensue with some of the larger bad debts.
As a result, it’s not unusual for loans that turn bad to take two to seven years beyond their initial planned repayment date or their date of default to be settled.
The average time to recover a loan after it has turned bad is 2.5 years, so you earn interest for a lot longer than originally planned on most of them.
As we know from years of information from HNW Lending and directly from some of its borrowers, the extraordinary slow pace that these cases take to get resolved through multiple rounds in the courts and auction houses would likely astound any of you who are not well-connected to these sorts of contentious proceeds.
Roughly half of the loans approved by HNW Lending are junior, meaning that a bank or some other lender gets its money back first, plus its interest, if a property needs to be forcibly sold.
The overall quality of HNW Lending’s security has been proven time and again. Six full annual cohorts of loans have matured, and a seventh is getting closer. Each time, HNW Lending has swiftly gone after all of the bad debts and the security, eventually recovering almost all of the large amount of bad debt.
HNW Lending can be loose in how it approves some of its loans. In particular, it doesn’t always get a full independent valuation of the property that borrowers put up as security on your behalf. This helps HNW Lending to approve more loans.
To offset the additional risk of that, the expected desktop valuation (an estimate of the property’s value without surveying it) needs to find that the loan amount is much less than the property is likely to be worth.
These loans come with a higher risk of losses due to legal battles that are very intense. In some cases, if the borrowers were to win their cases, it can potentially mean that lenders recover nothing. However, this still hasn’t happened in all these years. Generally, the most important open court cases involving HNW Lending that 4thWay has been following are inching in the right direction as usual.
Several appeals and cases won by HNW Lending last year reduce some of the doubts revealed in HNW Lending Wins Ruling, Contra To Lost Case Last Year. But that case and other major ones are still ongoing, with further court dates remaining.
Additional analysis: HNW Lending’s large loans
Recently in our reviews of P2P lending providers we’ve taken to publishing simplified summaries of some more of the analysis that we do in the background.
To that end, in this update, I’m going to brief you on two areas, the first of which is large loans. Large loans can contain what’s called “granularity risks” for lenders. That means drilling down into the details, which is where you can find oversized risks in a lending portfolio.
What has been the result of HNW Lending’s largest loans?
The average loan size is £282,000. Here, I’m looking at all loans of £750,000 or more that were due to be repaid at least three years ago – including the largest loan of more than £3.5 million.
That is 33 loans out of a total of 444 loans during that period. And it’s £46 million out of a total £110 million lent.
Most of those loans, including the four biggest, are secured entirely by a first charge, meaning you’re senior – no other lender to that borrower, such as a bank, will get their money back before you. After first loss, you were typically lending around 51% of the properties’ valuations.
Two out of those 33 large loans had small losses. One is a bad debt where all lenders have been repaid except HNW Lending and its directors.
That leaves three outstanding bad debts, with all other loans repaid in full. HNW Lending expects two of those to repay all lender money in full. The third one is expected to “just about pay online lenders in full, although HNW Lending’s directors won’t get all their first loss back.
Interest paid out to lenders on HNW Lending’s large loans already exceeds all those remaining bad debts in recovery.
While the results have been good so far, one really bad result could impact returns substantially for those lending in it. That said, most lenders spread their own lending more evenly between loans, regardless of their size, which nullifies this risk.
Additional analysis: past, present and future
Here, I’m going to split HNW Lending’s record into three chronological batches for you, based on when the loans were issued.
Batch one: 2014 to 2020
In loans that were approved during HNW Lending’s first seven calendar years:
- There have been £700,000 in losses so far out of £93.8 million lent, with HNW Lending typically taking a 10% first loss.
- £3.3 million of bad debt is still outstanding.
- That’s £4 million bad debt combined.
- Over £15 million has been paid out in interest, including in loans that were previously bad debts.
- So lenders have already been paid out around four times all the past losses and current exposure to losses.
Two large loans make up over £2 million of that remaining £4 million in bad debt. HNW Lending continues to describe the situation of those loans to us and believes full recoveries will take place. That would mean interest paid on batch one will be more than seven times losses in the end, with potential for earning greater than 20 times losses.
One more point on this batch: before recoveries, loans valued at £49.6 million turned bad at some point whereas £44.2 million never turned bad.
That means that, while typically three or four out of 10 HNW Lending loans turn bad, over half the pound amount turned bad during this seven-year period.
Batch two: 2021 to spring 2023
Loans in this period are a lot less matured than those in “batch one”, but all the good debts are now paid off in full. All that remains are some of the bad debts.
- There have been no write-offs so far out of £36.7 million.
- £8 million in bad debts are outstanding.
- £3.2 million has been paid in interest when counting all loans except the outstanding bad debts.
- So lenders currently have exposure to bad debts that are roughly 2.5 times the interest paid out so far.
£5 million of the remaining bad debt is in just three loans. With loans of that size, one very ill-fated loan can potentially wipe out a lot of the gains for the period (and one full recovery can greatly improve returns).
However, HNW Lending* expects good recoveries on those three overall, although in one of them lenders might “just about” get all their money back.
The other bad debts in this batch are split across smaller loans that are still in recovery procedures.
Nearly half the pound amount lent turned bad, although it was just one in three loans.
Batch 3: spring 2023 to the present
It’s too early to read much into this batch of £33.3 million-worth of lending, except to say that its bad-debt profile is a little better than usual for this stage in their lifecycle.
In one regard, much better at present: for a whole year, no new loans turned bad, according to HNW Lending data. This is by far the longest period of time HNW Lending has gone without that happening.
The outstanding debt in default and in the process of recovery as a proportion of all live loans is 31%, which is within norms for HNW Lending.
How much experience do HNW Lending’s key people have?
HNW Lending’s key decision-maker – who’s also the CEO – is a trained former chartered accountant. His property background doesn’t hold identical skills and experience to those we’d expect. However, he now has 12 years’ experience at HNW Lending itself.
The CEO clearly works very hard to prevent lenders from losing money, and he puts his money where his mouth is. With the biggest problem borrower in its first three years, for example, after recovering much bad debt, he ensured it was only he who had any money left on the line, with all P2P lenders repaid. He has done that a few times.
I would still like to see a wider variety of professionals working for HNW Lending.
HNW Lending review: lending processes
HNW Lending* mostly sticks to property or items it understands, with a maximum loan of 70% of their value and 65% in junior loans, which is a sensible limit.
It’s not ideal that it doesn’t always obtain independent valuations of property, vehicles or other assets used as security, although that doesn’t happen often.
Valuables used as security are insured and stored securely by HNW Lending.
Borrowers usually pay interest on a monthly basis which can be a useful early-warning system of potential trouble repaying later on.
HNW Lending is very fast to label a late debt as a default (aka bad debt) and to start pursuing the borrower for it vigorously, although it still takes longer to recover many debts than its nearest competitors.
Starting recovery procedures quickly is good, but HNW Lending’s own loan terms, target borrower market, aggressive loan sales policies and other techniques used to defend or support its interests do appear to leave more motivation and means for borrowers themselves to attempt to drag bad debts out for longer in the courts.
How good are HNW Lending’s interest rates, bad debts and margin of safety?
HNW Lending* repeatedly defies gravity. Each year has had high bad debts – 30%, 40% or even 50% before recoveries start coming in.
While that may not be good for lenders’ mental health, HNW Lending has so far gone on to recover virtually all of the amounts due.
Lenders are paid interest for the entire period that bad loans are outstanding – and usually they do end up receiving it.
The average loan size of the outstanding bad debts, after HNW Lending’s own first loss, is just 44% of the property valuations. (That figure is slightly flattering, as it doesn’t take into account that some bad debts have partly been repaid by selling some of the properties used as security when the borrower used more than one property.)
In 4thWay’s very harsh, conservative interpretation of the Basel stress tests – which are tests global banks are required to do to assess whether their loans are strong enough to handle a recession and property crash – HNW Lending’s loan book comes out well.
With the caveat that HNW Lending is much more complex to assess than most providers, the overall margin of safety still looks good, provided you spread your money out across dozens of loans (either manually or through auto lending) to contain risks.
HNW Lending’s Auto-Invest account
Auto-Invest currently pays 7% and spreads your money across at least 20 loans (the minimum used to be 15). When we have asked for a more detailed update on the constituents of this lending account, the actual number of loans has invariably been a lot higher than this – typically around 40. The spread across lots of loans is by far the best feature of the Auto Invest account.
In addition, HNW Lending’s own first loss of 10% applies to loans in Auto-Invest.
To date, lenders using auto-lend have always received the full interest due to them, and all losses have been covered.
While lenders selecting their own loans manually earn around 9%, HNW Lending* caps the interest rate you can earn in the same loans through its Auto-Invest account. Currently, that limit is set at 7%. Surplus interest above the advertised rate is held back and used to meet any missed interest payments so that lenders regularly receive what they’re due.
In one case, there was a loss on a loan in the auto-lend account, but that small loss was also covered by the interest surplus.
Over the 12 years, there have been some bad patches where the surplus interest nearly wasn’t enough to cover everything. Recently it has often been in the low tens of thousands – even just £20,000 – so you shouldn’t consider the surplus to be of great protection if several loans are written off in quick succession.
When you lend through HNW Lending’s auto-lending account, you’re buying a lot of loans that have already turned bad. While it states in small text on its website that it will lower the amount you pay for such loans if necessary, it has only ever seen fit to do that once, and that was on the one loan with a small loss that was covered by surplus interest.
One point to watch is the account allows up to 15% of your money to be in a single loan. It’s best that this doesn’t happen, with closer to half that amount being more reasonable for your largest holdings. That said, of the eight very large loans in the Auto-Invest pool that have turned bad and are in recovery, the largest of those holdings makes up less than 2% of the total.
HNW Lending’s Select-Invest account (manual lending)
Most money lent through HNW Lending* is done manually.
When choosing your own loans, lenders might expect to earn around 9.01%, which is more interest than auto-lend, at least in part because no interest is diverted to cover late payments or bad debts.
Losses will be unevenly spread for manual lenders who haven’t adopted sensible strategies for themselves in spreading risk across lots of loans. With manual lend, the responsibility not to put too much money into any one individual loan is entirely yours.
Has HNW Lending provided enough information to assess the risks?
HNW Lending shares a great deal of detailed information and data with us, although I frequently spot issues with the quality of that data. It’s quick to respond to our questions. Its history is deep enough for our full risk-modelling techniques (enabling us to assess it for a 4thWay PLUS Rating).
P2P lending providers with loans like HNW Lending require a very close eye from 4thWay. By their nature, it’s easy to miss escalating problems – or conversely, to mistake their typically huge initial bad debts for a catastrophe when they’re actually highly resolvable. There is more room for error or misforecasting here than just about anywhere else.
I particularly take my time when I’m leading the reassessment on HNW Lending to slice data in many ways, search for issues in its error-prone loan book, meet with HNW Lending and receive additional qualitative reports.
While 4thWay gets detailed information, HNW Lending should provide much more information and 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’re getting into.
Information available to non-registered users of the HNW Lending website lacks clarity on such things as its first-loss cover, auto-lend interest rates and late loans.
I really wish HNW Lending made it more clear to potential lenders, in big, highlighted capital letters, that when you put money into its auto-lending account you’ll be buying a fair proportion of bad debt and that there’s rarely a reduction in what you pay for loans that are bad. That’s even though none of those have led to losses so far – you still should be well aware of it.
To signed-in lenders, HNW Lending provides detailed information on each loan. It shows them the current status of each loan, including late or bad loans that are held in the auto-lend account, as well as information on the first-loss paid for by an HNW Lending director.
In addition, lenders get a detailed creditworthiness assessment for each loan, showing how the borrower can afford the monthly payments and repay at the end. Plus, for outstanding bad debts, HNW Lending provides comprehensive monthly updates to lenders. This is an important and desirable feature that is often missing in peer-to-peer lending.
I had a sneak preview in June 2026 of detailed, clickable designs for logged-in lenders. While unfinished, it improves on the data and information that you get.
Is HNW Lending profitable?
HNW Lending’s published accounts are too abbreviated to reveal much.
However, it’s likely that HNW Lending* is accurately telling us that it has made million-pound profits for at least seven years. (That’s before dividends, which are payouts to directors from profits.)
The spread between what lenders are paid and what HNW Lending charges borrowers is very large, and HNW Lending’s own cost base likely low enough that it is probably highly profitable.
What can you tell me about HNW Lending’s cybersecurity?
Our security partner Sucuri has done a soft test of HNW Lending’s website and found it low risk, with no malware detected. It finds just a few small improvements it could do to harden its defences.
Google Safe Browsing, McAfee and all the other key players in online safety have not entered HNW Lending onto their blacklists.
For HNW Lending’s website and all data stored online, HNW Lending has no external service to monitor performance or security issues, which I’d prefer to see.
Instead, HNW Lending has told me that it has built monitoring into its website, which sends them an email with any potential issues every 24 hours. HNW Lending also mentioned using Slack for monitoring, although Slack is not intended for monitoring the performance or security of external websites and corporate databases.
HNW Lending defends its self-monitoring position by telling us that while it stores name, address and bank details online, it doesn’t do so for dates of birth, National Insurance numbers or “anything else useful”. All that other data is held offline. If a lender wants to change their bank details, then HNW Lending will call them and obtain a recent bank statement.
Probably even more important than monitoring is a firewall to, if necessary, block information going into and out of its website to prevent malicious traffic. HNW Lending tells me it has a firewall, but I have no details on the supplier.
HNW Lending also has penetration testing (loosely speaking, that means attempting to hack in to see how good the security is), but I don’t know how often that is conducted. That testing is not done by any firm I know but by “one individual”.
What is HNW Lending’s minimum lending amount and how many loans can I lend in?
If you want to use auto-lend and earn a target 7%, it currently spreads a minimum of £10,000 across at least 20 loans, and typically 30-40 loans, with a maximum of 15% of your money in any one loan. If you use the IFISA, the minimum you can put into it is £5,000.
If you prefer to pick individual loans yourself for around 9%, it’s very exclusive, with a high minimum of £10,000 in each loan you lend in. This reduces to £5,000 per loan for HNW Lending’s IFISA.
Does HNW Lending have an IFISA?
The question seems redundant, as I’ve mentioned its IFISA many times already, but here are some key details:
| IFISA details | Description |
| Open to new lenders | Yes |
| Lenders can lend right away (if loans are available) | Yes |
| Minimum opening deposit for new ISA contributions | £5,000 |
| Minimum lending amount (if different to above) | £5,000 per loan |
| Interest rates the same as non-IFISA accounts | Yes |
| Additional fees for lending through an IFISA | £0 |
| Transfers from or to other ISAs | Description |
| Minimum transfer-in amount | Lender should be aiming to get £10k+ |
| Transfer-in fee | £0 |
| Transfer-out fee | £75 |
| Partial transfers from other ISAs allowed | Yes |
| Partial transfers to other ISAs allowed | Yes |
| Extra features | Description |
| Lenders with ordinary accounts can automatically divert repayments and interest to their IFISA | Yes |
| Flexible ISA (you can withdraw and re-deposit new ISA money in the same tax year without losing your ISA allowances) | Yes |
Can I sell HNW Lending loans to exit early?
With HNW Lending’s Auto-Invest account, you can exit early at no cost if you’re potentially willing to be patient. HNW Lending will match what you want to sell with lenders who are looking to put money into Auto-Invest. Alternatively, it will pay you back when a borrower repays a loan within Auto-Invest.
If you exit this way, you can sell your bad loans as well as your good ones. HNW Lending* might reduce the price you get for some of your bad loans when you sell Auto-Invest holdings (even though it has only done this a little bit on one loan up to this point).
However, if you want to get out of your Auto-Invest holdings in a hurry, you may use HNW Lending’s secondary market, which is where people can trade existing loan parts to each other.
The secondary market is available for lenders choosing their own loans through HNW Lending’s Select-Invest account as well as an alternative way to sell up if you’re a lender using the automated account.
If you exit this way, it will cost you 1.5% of what you sell.
When selling through the secondary market, you can’t sell loan parts that have defaulted or loans that are 30+ days late. If you want, you can try to sell your loan parts at a premium or a discount (for more or less than their par value).
However you attempt to exit your loans early, remember that with money lending, you should expect that sometimes early-exit opportunities fail, and then you simply have to wait for some or all of your loans to be repaid naturally by the borrowers. That’s one of the costs of getting a stable, fixed rate of return.
What more do I need to know?
Regulatory and legal structure
HNW Lending approves nearly all loans using the most typical, standard P2P agreement, which is regulated by the FCA. It also approves other loans using other structures that simulate the P2P, direct lending structure. Both structures are common.
It’s unusual for there to be a blend of structures, but the reasoning is straightforward: the regulator requires that HNW Lending’s IFISA uses P2P agreements, while the alternative structure sometimes used in its P2P lending account is easier and incurs fewer costs for HNW Lending.
Moral hazard
“Moral hazard” is an expression I learnt about in a former life. It’s used in insurance to mean the total weight of evidence – often circumstantial and superficial – that speaks against the character of the people involved, which might potentially lead to an unpleasant surprise. For our purposes here, that means considering the level of moral hazard in those running HNW Lending.
HNW Lending is by its nature a wheeler-and-dealer, which is fine when the loan size is not unreasonable compared to the property and when the lending rates are sufficient, but it also begins to build the picture – potentially – of the type of person who would want to approve such loans.
HNW Lending routinely provides poor quality data, rarely seems to directly acknowledge or admit mistakes, has unusually intense court battles with borrowers and has suffered especially close scrutiny from the financial regulator in the past.
An independent lawyer 4thWay consulted didn’t at all seem perturbed by the judge’s comments about HNW Lending’s director that I reported on in this page, nor about the judge finding that HNW Lending had created a regulated loan even though it wasn’t authorised to do so. Nevertheless, those sorts of items would make it onto any insurance provider’s list of moral hazards.
But the director’s mature response to our updates – including the moral hazard section – is a tick on the positive side.
We will continue to monitor HNW Lending vigilantly to do our best to see that it’s maintaining standards.
Conflicts of interest
HNW Lending* told 4thWay it rarely charges default interest but, when it does, it passes it onto lenders.
In practice, it seems that HNW Lending sets a high “standard” lending rate but then allows borrowers to pay a “discounted” rate that is two-thirds lower. Borrowers lose their discount if they breach the terms and conditions of the loan, which can include missing a monthly interest payment deadline by one day. The borrower then moves to the standard rate.
This could be the difference of the borrower paying around 12% per year to HNW Lending (before you take your cut) and paying around 36%.
Since HNW Lending doesn’t officially label that as default interest, lenders don’t get any of it.
Technically, HNW Lending can give grace to borrowers and not move them to their standard rate, but I consider it likely that it rarely, if ever, grants borrowers that grace.
That means, with around four in ten borrowers breaching a contract term, even if just in a minor way, HNW Lending rakes in huge amounts of interest while continuing to pay lenders the same single-digit lending rates they were earning to begin with.
From the best figures I can obtain, I think it’s easily possible that HNW Lending earns more than two times what lenders earn and that two thirds of its revenue is due to the penalties.
That level of revenue is not necessarily obscene for these kinds of loans and for the overall package offered to lenders by HNW Lending in terms of risk-reduction features. Indeed, I’m pretty sure that HNW Lending has used some of its penalty interest to repay lenders before some borrowers have even settled the full bill.
Yet the fact that HNW Lending’s own income is possibly heavily weighted around bad-debt penalties causes a potential conflict. This could reveal itself in lower-quality loans for example, as HNW Lending can earn bigger fees when loans turn bad.
It can also cause deliberate feet dragging to get claims through the courts, in order to rack up greater penalties for borrowers. All else being equal, the longer a recovery takes, the worse the prospects for full recovery – and it’s worse for the borrower too.
HNW Lending has indicated in the past it might sometimes pay individual lenders from its own earnings on a loan before individual lenders lose money on it. That would be useful but it doesn’t mitigate the conflict of interest.
Well done for making it through this long HNW Lending Review!
Independent opinion: 4thWay will help you to identify your options and narrow down your choices. We suggest what you could do, but we won't tell you what to do or where to lend; the decision is yours. We are responsible for the accuracy and quality of the information we provide, but not for any decision you make based on it. The material is for general information and education purposes only.
We are not financial, legal or tax advisors, which means that we don't offer advice or recommendations based on your circumstances and goals.
The opinions expressed are those of the author(s) and not held by 4thWay. 4thWay is not regulated by ESMA or the FCA. All the specialists and researchers who conduct research and write articles for 4thWay are subject to 4thWay's Editorial Code of Practice. For more, please see 4thWay's terms and conditions.
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.
*Commission, fees and impartial research: our service is free to you. 4thWay shows dozens of P2P lending accounts in our accurate comparison tables and we add new ones as they make it through our listing process. We receive compensation from HNW Lending and other P2P lending companies not mentioned above either when you click through from our website and open accounts with them, or when you make an investment, or to cover the costs of conducting our calculated stress tests and ratings assessments. We vigorously ensure that this doesn't affect our editorial independence. Read How we earn money fairly with your help.
