Somo’s Bridging Lending Account received an Exceptional 3/3 4thWay PLUS Rating. These loans have been paying lenders . That’s before bad debts, although historically losses have been virtually zero. Visit Somo* or keep reading the Somo Review.
Somo’s Bridging Lending Account received an Exceptional 3/3 4thWay PLUS Rating. These loans have been paying lenders . That’s before bad debts, although historically losses have been virtually zero. Visit Somo* or keep reading the Somo Review.
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:
Somo* does short-term property (bridging) loans typically from £30,000 to £1.5 million, mostly on residential property.
The loans can be for two years, but most loans are shorter than that and on average they’re repaid by the borrowers after about 15 months. Borrowers often pay the loan and all the interest in one go at the end.
Somo started doing loans through its online lending platform in 2015, although non-platform lending started in 2010.
Total lending from 2014 has been £429 million. Some tens of millions more was lent prior to that, but we have no further details.
Somo has provided a large amount of historical data, access to key people, and responses to our queries, and maintained this transparency for several years now. We see that it has kept up attractive lending rates even as it’s grown, while maintaining its lending standards.
Somo has processed thousands of loans with no losses to lenders, except losing some interest on eight loans.
It approves a lot of loans, so that you have a lot of opportunities to lend in. One-in-ten loans take one to five 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.
The maximum you will lend through Somo* on most types of loans is 70%. Somo does go up to 75%, but that is always funded externally, i.e. not through the online lending platform that you will be lending through.
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. It’s reassuring to see that overall the ratios remain very steady over a long time period.
The overall average loan size compared to the property valuation is 58.72%, which is pretty much where it was in 2016. This is somewhat on the lower (i.e. better) side compared to competing providers with similar quality loans.
The split between senior and junior lending is currently around one-to-three in favour of junior lending.
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. This is enforced through what is called a legal second charge or third charge. For the additional risk of not being paid first, you’re currently earning about 10% on average.
The typical loan size of 61.52% of the property valuation is highly creditable for junior lending. The lender that is senior to you, which will typically be a bank, usually holds just a small share (which is better for you), averaging 40.90%.
You’re getting 6.89% on senior lending, with the average loan amount being just 52.88%, which is very low. In senior loans, this is enforced through a first charge that is registered against the property.
Somo further splits loans that change again the order in which people are repaid.
About one-in-ten loans are split into tranches to cater for different lending risk appetites. E.g. a senior loan for £150,000 might be split into £100,000 and £50,000, with “tranche A” paying lenders 8% and tranche B paying 10%.
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 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.
5) Finally, Somo earns all its own fees last – paying anything it has earned in a given loan to lenders, if they are unable to recover all their money and interest.
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 decisions on the current property valuation, not the hoped-for future value after works are completed.
In autumn 2025, Somo launched a first-loss guarantee on its loans with second charges. (It also approves some third-charge loans, but they are remarkably rare.)
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 pay you back 10% of that loss.
In real terms, this is the equivalent of lowering the amount you’re lending on a property 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%.
That’s not life changing, but it can take a little bit of the edge off. More than that, the guarantee puts a bit more skin in the game for Somo.
The maximum that Somo will pay out on all loans is capped at over £1 million across all loans, but 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.
The guarantee is subject to change at any time.
You can read more in Somo Now Taking First Loss On Most Loans.
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 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.
It’s 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. The lengths they go to are beyond what I’m used to seeing in bridging lending.
That said, Somo’s overwhelming focus is on quality of the property security rather than 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.
Somo lenders are currently earning 9.43%.
Over many years, lenders have lost just a very small amount of interest to bad debts, imperceptibly impacting the overall return. Lenders have lost none of the money they put into any loan.
At the same time, lenders have been paid out £30 million in the past nine years alone.
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.
Just to pull out one of the features of the detailed historical data provided to us, looking at the oldest half of all the loans, barely one month’s interest has been lost to lenders overall on the loans that suffered problems during those years. That’s one month out of dozens of months.
We conduct stress tests that 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 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 attractive versus the risks.
Somo*provides 4thWay with sufficient access and information for us to assess it on an ongoing basis.
When it comes to providing information to you lenders directly, unfortunately you have to sign up and log in, and then click on its logo and scroll to the bottom of the page, in order to see its lending statistics – and even the website’s FAQ page.
Its website statistics for lenders are primitive and often out-of-date, but still useful for you. Somo should provide a lot more information on its people to its website users as well.
Independently audited accounts from Somo* show that it has made large profits for many years; for example, between £3.9 million and £5.1 million over the past four years.
This 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.
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.
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.
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.
Somo does not have an IFISA.
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.
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 very 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 a little over 5% of the loan amount. These all-in costs compare pretty well to Somo’s most similar competitors.
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 as 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*.
3 PLUSes is best. What does the 4thWay PLUS Rating tell you about the risks and rewards?
Here we show the P2P lending site's own estimate (or 4thWay's if theirs are not appropriate)
Lower Risk Scores are better. How is this different to the 4thWay PLUS Rating?
£429 m since 2014 in secured short-term (bridging) loans, with early exit. MIN £5,000 PER LOAN. SOPHISTICATED/WEALTHY INVESTORS ONLY
Early exit is not guaranteed. Usually, other lenders need to buy your loans
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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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