Property backed IFISA
There are a number of innovative IFISAs which are available to borrowers. They are offered via a variety of peer to peer platforms which enable lenders and borrowers to be matched. Lenders input the rates which they require and are then matched with borrowers who feel able to provide those rates. Rates are more attractive for innovative financial ISAs than traditional cash ISAs. Peer to peer lending cuts out the bank and enables lenders and borrowers to be matched directly. With peer to peer ISAs come higher risks and also higher rates. Rates are difficult to compare on peer to peer ISAs as varied rates are offered and lenders and borrowers seek different rates and are matched accordingly.
There are a variety of IFISAs which are available which act as tax wrappers and ensure that the returns you receive are tax free.
Property backed Loan IFISA
A property backed IFISA is an IFISA which buy to let landlords can use to raise capital. They can use their property portfolio as collateral to raise cash to either buy more property or finish a development. These types of IFISAs are quite popular with developers also who wish to raise further funds to complete a building development. For a lender they represent a lower risk because they are backed by tangible physical assets. Although obviously there is risk attached if the value of the property were to fall. Generally speaking though, a property IFISA is a good risk due to the potential for the property portfolio to rise once the building development has been completed and houses begin o sell.
There are a plethora of different IFISAs which are available.
You can invest your money from anywhere between 1 and 5 years. So depending upon whether you want access to your money quickly or can afford to lock it away for 5 years then the returns you receive will reflect the length of your investment. Obviously, the longer you can afford to lock you money away, the higher the returns you will receive. IFISAs are generally short term investments and you can sometimes have the option of cashing out your loans and selling them on some platforms but this leads to a forfeit of fees because you are using the option to get fast access to your funds.
There are many different functions which IFISAs perform. For example you can opt for a crowd2fund IFISA which allows you to invest as little as £10 and which invests in loans to businesses. Many of these IFISA’s are often secured against a company’s assets such as stock or property or something else tangible so the investor is protected should the borrower default on their loans. You will also be able to spread your risk by lending small amounts of capital to several borrowers to build your loan.
IFISA platforms enable you to lend directly to the consumer market. So platforms will match consumer borrowers with private lenders. Each borrower will list the rates up to which they will be prepared to borrow, the amount of capital they require and also the term of the loan they require. Likewise lenders will choose the rate of return they wish to gain, the length of their term and the amount of capital they are prepared to lend. Like any other investment, the longer the term and the larger the capital sum, the more attractive the returns.