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Octopus Choice Review

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By on 25 February, 2019 | Read more by this author

Here's the Octopus Choice review from one of 4thWay's experts:

4thWay's Quick Expert Octopus Choice Review

Offers something different that could add to your current P2P lending.

Established in 2016, lenders using Octopus Choice have lent £340 million to property borrowers.

It's part of the Octopus Investments group, which manages £6 billions pounds-worth of investments and has been profitable for at least ten years. This parent company owns the property lender formerly known as Dragonfly, a big industry brand.

Octopus takes the first loss on all P2P loans of 5%. It uses its own money to buy your loans if you want to sell early, where possible, and I estimate the pot for that was about £2 million in cash in 2018.

Borrowers are mostly buy-to-let landlords and owners of rented commercial properties. The typical rent covers the monthly P2P mortgage payments plus a bit more, although the property might briefly be untenanted at the start.

Octopus also does a good chunk of short-term (bridging) property loans and bridge-to-let loans, which are shorter loans during a refurbishment before a borrower switches to a traditional buy-to-let mortgage. The average loan is for 61.20% of the property valuation, which is very good.

I firmly believe that Octopus Choice has the people and skills to approve loans appropriately. Its people have a huge amount of experience. The group segregates safer, simpler loans for its peer-to-peer lending offshoot. In particular, it's interested in the quality of the borrower, not just the property, and it dodges property development lending and riskier types of bridging loans.

Four people in succession need to approve a loan before it's accepted. Key people have discussed with us their loan-approval and other processes in detail. These go beyond what we usually expect to see, and show creative thinking and experience in how they cope with quirks of a particular borrower or security. Octopus has quite a few specialists, from refurbishment experts to their own property surveyors. It always appoints an independent surveyor.

The 4.0% expected interest rate for lenders seems low at first sight, especially for bridging loans, but for the specific subset of bridge and other loans that Octopus Choice approves, I believe rates earned by lenders offer a good margin of safety compared to the risks. Bad debts have so far been very low and there are no losses to date.

Octopus has been unusually transparent and accessible to 4thWay. It just needs to start providing 4thWay its data on a regular basis and then we can assess it for a 4thWay PLUS Rating.

The minimum lending amount is just £10. Octopus spreads your money across at least 10 borrowers, adjusting portfolios every day. After two years, the average lender is lending across 130 loans. You can probably spread your money more rapidly by lending over several months. At least in recent months, there have been lots of loans to lend in.

The Octopus group holds over £100 million more than it's required to by the regulator.

Octopus Choice's lending accounts are available as IFISAs.

Visit Octopus Choice.

Independent opinion: the opinions expressed are those of the author 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.

Experts, journalists and bloggers 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.

Our service is free to you. We don't receive commission from the above-mentioned companies. We receive commission from some other P2P lending companies when you click through from our website and open accounts with them. This doesn't affect our editorial independence. Read How we earn money fairly with your help.

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Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers “bonds”. Unlike its P2P lending service, its bonds don’t allow you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

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Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers two “bonds”, one of which is available as an ISA.

Unlike its P2P lending service, neither of these bonds allows you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×

Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers two “bonds”, one of which is available as an ISA.

Unlike its P2P lending service, neither of these bonds allows you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×

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Orchard’s lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Orchard’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Got it

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Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers “bonds”. Unlike its P2P lending service, its bonds don’t allow you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×
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