Invest & Fund Review
Here's the Invest & Fund review, written by one of our specialists. You can find more reviews in our comparison tables.
Invest & Fund is the only P2P lending company that has a combination of five things, leading to excellent risk-reward balance…
Invest & Fund Review: their best-rated product
This account has been paying 6.75% after fees and bad debts in the regular P2P lending account and 6.25% in the IFISA due to slightly higher fees.
What is Invest & Fund?
Invest & Fund* does residential bridging and development loans usually between £500,000 and £7.5 million, with a planned term of up to 18 months.
When did Invest & Fund start?
Invest & Fund started doing P2P property loans in 2015. Total lending is now £150 million.
What interesting or unique points does Invest & Fund have?
Invest & Fund is the only P2P lending company that has this combo of five things:
1) the top 4thWay PLUS Rating, showing an exceptional risk-reward balance, 2) a good 4thWay Risk Score, showing few losses before interest in a severe recession and property crash, 3) over five years of history, 4) low bad debts with proven, swift debt-recovery practices leading to zero losses and 100% recovery, and 5) enforced lender discipline through a cap of 10% of lender money in any one loan.
How good are its loans?
Invest & Fund* focuses entirely on residential properties, which makes it easier to assess loans and build on the experience of Invest & Fund's people further. It also lowers the risks when compared the commercial property (shops and such), which is intrinsically riskier.
The highest ever loan size compared to the property value on Invest & Fund's bridging loans reached 78.6%. But, during 2021, all outstanding bridge loans were repaid. Invest & Fund is relatively cautious on bridging loans, rarely approving one that hasn’t recently reached practical development completion. This is a distinguishing feature that puts Invest & Fund's bridging loans at the safer end.
The highest ever approved development loan size compared to the expected sale price of the completed development is 69.7%. This is a very sensible upper limit that compares very favourably to other P2P development lending.
Nearly one in ten Invest & Fund's loans have been junior loans paying 15%-24%, which come with substantially higher risks of large losses in the event of the loans turning bad. But these loans are only to existing borrowers and under limited circumstances. In late 2021, there are no junior loans outstanding as all have been repaid in full.
Invest & Fund used to approve loans from £100,000 to £2.5 million, so around half or less the current size. This is unlikely to impact the quality of the loans, although 4thWay will monitor as usual.
Invest & Fund during COVID-19
Invest & Fund paused new lending for about five months near the start of the pandemic, but restarted again. As a result of the pandemic, quite a lot of loans briefly fell behind on repaying, but there are now no loans that are late, and the loan book looks very strong.
Invest & Fund* kept its loan resale market fully open and functioning normally throughout all COVID-19 lockdowns. All loan parts up for resale were quickly purchased. As of 31st December, 2021, there are no loan parts available, due to strong demand from lenders. This is a double-edged sword: it means you might at times find it harder to lend your money through Invest & Fund, but it does demonstrate that long-term lenders remain faithful due to excellent results.
During the pandemic, Homes England, a non-departmental public body that funds new affordable housing in England, agreed to start lending through Invest & Fund for seven years.
How much experience do Invest & Fund's key people have?
In my previous update to the Invest & Fund Review, I noted that I was satisfied with the breadth of experience in property lending and risk analysis. 4thWay's extensive research and interviews with the Invest & Fund* team has shown many decades of relevant experience between them, including at a senior level at major banks.
All I can add in 2021 is that they have since then added an additional highly experienced person to the team.
Invest & Fund review: lending processes
Invest & Fund has high-quality processes for checking these kinds of loans, looking into the borrowers themselves, financial accounts, the development sales plan, any important contractors and proof that previous developments were completed as expected. The property is always physically inspected, which is not the case at all P2P lending companies. It ensures better and more consistent standards, lowering the risk of suffering a loss and it reduces the number of loans that are approved that ought not to have been.
Invest & Fund* generally avoids areas where the property market is widely considered to be over-heated, such as central London.
Invest & Fund's borrower- and development-monitoring practices are equally top-notch and comprehensive.
A development is not fully funded by Invest & Fund lenders in advance, and then drawn down by the borrower. As and when each tranche of the development loan is required, Invest & Fund asks individual lenders to fund it. This is not ideal, as it means that potentially a development might go wrong if lenders suddenly withdraw from lending. However, Invest & Fund's strong record even during the pandemic and also its other sources of cash, such as from institutions, gives reassurance.
We would ideally like to see Invest & Fund more routinely request that a borrower prepares a plan B in case its initial plan to repay the loan falls through. However, with its excellent record of full repayments, it's potentially overkill in this case.
Also, Invest & Fund's key rainmaker clearly has a lot of experience in helping borrowers to come up with improved plans if trouble hits, and so they will be able to help with alternative plans as and when it becomes necessary.
Very critical for these kinds of loans, Invest & Fund has demonstrated that it takes action quickly if a loan is turning bad. It has suitable processes in place to deal with the recovery of bad debt.
How good are Invest & Fund's interest rates, bad debts and margin of safety?
Invest & Fund* interest rates have clearly been sufficient and appear to be attractive for the risks involved, with just a few minor bad debts, all swiftly recovered.
Just one loan has ever turned bad, but has now been recovered. On that loan, borrowers paid lenders over double the standard lending rate in compensation for the increased risk. It’s good to see that lenders are paid the penalty interest, which is not always the case. (See default interest section of bridging piece.)
Penalty rates aside, lending rates have come down over the past few years to better align with lower risks, but still remain highly satisfactory.
Indeed, in November 2021, Invest & Fund started providing even higher-quality data to 4thWay, that shows that almost no loans need to be extended or rolled over. This is excellent for these kinds of loans. Not only does it mean bad debts are not hidden by kicking the can down the road, but it's one more piece of evidence for the pile that loans aren't likely to turn bad at all.
Invest & Fund has achieved our top 4thWay PLUS Rating of 3/3, “Exceptional”. The 4thWay PLUS Rating shows that lenders spreading their money across many loans across lending accounts of this calibre can strongly expect to make money even through a very severe recession and property crash.
Lenders have an excellent margin of safety.
Has Invest & Fund provided enough information to assess the risks?
Invest & Fund* has been badgered by 4thWay even more than average, and over a longer period, and yet has very patiently provided detailed data, answers to our questions and access for interviews. Invest & Fund is amongst the most transparent P2P lending companies, making it easy to do a detailed assessment of its people, processes and performance.
While 4thWay receives more than it needs, Invest & Fund could provide more information and statistics to prospective lenders on its own website.
Is Invest & Fund profitable?
As of Invest & Fund's most recently filed and audited accounts, it's still loss making, although this is to be expected at this stage in its growth.
What can you tell me about Invest & Fund's cybersecurity?
Invest & Fund doesn't automatically redirect you to the secure version of its website if you go to the insecure one. It's difficult to end up at the insecure version, however, since you would likely have to deliberately type in “http” into your browser. This is therefore a very small risk.
Invest & Fund's website technology is up-to-date, doesn't appear to have malware and is showing as clean by Google Sage 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 is unclear whether Invest & Fund is automatically monitoring for hacking and malware activity, although Invest & Fund informs us it has a firewall in place to prevent hacks.
This assessment is not based on a full attempt to hack into the website, but rather on broader scans from our security provider Sucuri, which can lead to errors.
Is Invest & Fund a good investment?
Invest & Fund* is a good investment that would fit well in almost any portfolio of P2P lending accounts.
What is Invest & Fund's minimum lending amount and how many loans can I lend in?
The minimum you can put into Invest & Fund is £2,500, although no more than 10% of the money you put into Invest & Fund can ever be put into a single loan, even if there are not currently enough loans available. While this could mean some money remains unlent a little longer, this is very responsible from Invest & Fund, considering at many platforms you could theoretically pile all your money into one loan.
The minimum that you can lend in a single loan is £250.
Most lenders usually have their money lent and diversified automatically. You can select loans for yourself if you are a self-certified sophisticated lender, high-net worth investor, elective professional lender or per se professional lender.
Does Invest & Fund have an IFISA?
Invest & Fund's account is available as an IFISA. It's exactly the same, except that, unusually, it has slightly higher fees that effectively reduce your lending rate by half a percentage point.
Can I sell Invest & Fund loans to exit early?
Yes, you can sell your loans to other lenders for a fee of 0.25%.
Thank you for reading the Invest & Fund Review! Visit Invest & Fund*.
Invest & Fund review: key details of its lending account
4thWay PLUS Rating
Interest rate after bad debt
Here we show the P2P lending site's own estimate
4thWay Risk Score
Lower Risk Scores are better. How is this different to the 4thWay PLUS Rating?
Invest & Fund Quick Expert Review: the only P2P lending company that has a combination of five things, leading to excellent risk-reward balance…
Invest & Fund does residential bridging and development loans usually between £500,000 and £7.5 million, with a planned…Read the full review here
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 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 the 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 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 Invest & Fund and other P2P lending companies not mentioned above when you click through from our website and open accounts with them. We vigorously ensure that this doesn't affect our editorial independence. Read How we earn money fairly with your help.