Propifi p2p lending platform review
Propifi is a new p2p lending platform from the UK that offers investors the opportunity to invest in property bridging loans.
It’s a new p2p lending platform I found while they were looking for funding on Crowdcube, They just launched their website today and added their first investment on the platform.
They are direct competitors of other UK lenders, like Lendy, PropLend and CrowdProperty.
Update (April 2019): Propifi suffers from the chicken or the egg problem. They couldn’t bring investors to the platform because there weren’t many loans available. And they also couldn’t bring more loans on the platform because it didn’t have enough investors. Because it didn’t have enough capital to invest by itself in the listed loans, it’s currently looking for some institutional investors to invest in their loans and jump-start the platform. Until then, Propifi is closed to retail investors (like me).
Who can invest in Propifi
People from almost all the countries in the world can create an account on Propifi and invest.
For now, only people from the UK, Germany, Sweden, Netherlands and South Africa can invest more than 2500 EUR on the platform though.
How it works
The loans offered have an interest rate between 8% and 12%. One interesting thing is that the interest for the entire loan term is paid within the first 14 days after the loan has been funded.
The minimum investment is 1 GBP. You can fund your account either by bank transfer or debit card payment.
Bridging loans are short-term (typically from 1 to 18 months) property-backed loans. They’re a lot easier and faster to obtain than typical mortgage loans, but they have a higher interest rate. Companies might choose to apply for bridging loans because they need quick access to funds.
There’s no secondary market and no way to exit your investment earlier once the loan has been funded, which is a bit discouraging.
Is it safe
Propifi is regulated by the FCA (Financial Conduct Authority). This means they have to abide by certain regulations regarding capital requirements (a minimum capital of 0.3% of all loans offered), investors money protection, dispute resolution and what happens in the event of bankruptcy.
All loans are based on first charge security, which means in the event of borrower default or payments delay, Propifi has the first call on any funds available from the sale of the property.
Investing in Propifi
The platform is relatively simple for now. You can see the available investments, filter them by loan type, risk category, interest rate, location, loan amount and loan to value ratio, and that’s all.
Once you invest in a loan, you’ll need to wait for the loan to be funded in order to receive your interest payment. The entire interest is paid at the beginning of the loan term. Then, you’ll receive the entire principal back at the end of the loan term.
There is no auto-invest yet or secondary market. In their defence, they just launched their platform.
The loans are split into 5 risk categories, based on the loan to value ratio.
- low risk (category 1) – LTV ratio is less than 50%, the collateral is only with buy to let properties, the borrower has a low score on the credit file and at least 6 years history
- normal risk (category 2) – LTV less than 60%, the collateral is on buy to let, commercial and corporate properties, the borrower has a low or normal score on the credit file and at least 6 years history
- moderate risk (category 3) – LTV between 60-70%, the borrower has a moderate score on the credit file and at least 6 years of history
- high risk (category 4) – LTV between 60-70%, the borrower has a high score on the credit file, no assets for director
- very high risk (category 5) – LTV between 60-70%, the borrower has a high or very high score on the credit file, existing adverse credit, no assets for director
The loan I’ve invested in (the first one on the platform), is a moderate risk loan. It has a 10% interest rate and a 6 months term.
I like that I can access the property valuation document and review it. Each project has an updates section, along with a discussion forum and one where you can ask Propifi some extra information about the project.
Conclusions on Propifi
Propifi is a new platform on the p2p lending market. They’re not much different from any other crowdlending platforms around.
Due to the credit shortage companies suffer, there’s still enough place for new p2p lending platforms on the market.
All the loans are backed by property, which adds a layer of protection against companies’ default.
The platform is rather minimal for now and I’m waiting to see how it evolves. I like the interest rates they offer and the fact that the interest is paid at the beginning of the loan term.
I like that the platform is transparent with the way it conducts the valuations for the collateral, the total costs of the loans and fees taken by both Propifi and other 3rd parties.
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Propifi p2p lending platform review
Propifi is a new p2p lending platform from the UK that offers investors the opportunity to invest in property bridging loans. It's a new p2p lending platfo