6 Month Update: My Experience with Lendy (formerly ‘Saving Stream’)

Back in November 2016, Lou and I left hilly Herefordshire for the flatlands of Cambridge. When we sold up, we released a nice sum of capital from the appreciation over the 6 years of living there.

I put aside money for my ISA allowance, personal development, and spending money, but I still had a good chunk left over. I was interested in using some of the money for purchasing a buy-to-let property, but when I declared my intention I was contacted by a couple of friends (who were and still are invested in multiple properties) and told me that it might not be the great investment I thought. They both told me that you can still make a lot of money in property, but it can be very ‘hands-on’ and if you make it passive, it can eat into your returns.

One of my friends said that if he could, he would transfer all of his money over to a Peer to Peer company called ‘Saving Stream’, who have since changed their name to ‘Lendy‘*.

He told me that he put a fair chunk of capital into them and his experience to date had been very positive. In fact, the only downside was the difficulty in getting invested because their popularity was growing and loans were being funded very quickly. He continued to tell me that they hadn’t had any losses to date and they were paying a fixed 12% ROI.

My spider sense was tingling….

Usually, when something sounds too good to be true, it usually is. I thought it was worth checking them out and seeing if they were as great as he made out. After checking out their website and scouring the internet/forums for information on them it looked like they could be a legitimate investment option. I decided to initiate a small sum of money to start with, test the service and return, and go from there. Over the last 6 months, I’ve deployed more capital into the platform and reinvested all of the returns, which leads me to the title of the Blog Post…

I decided to initiate a small sum of money to start with, test the service and return, and go from there. Over the last 6 months, I’ve deployed more capital into the platform and reinvested all of the returns. So what’s my experience been like in the last 6 months?

What have I REALLY earned in interest?

How many loans have defaulted?

Would I recommend them?

Short answers:
  1. What have I REALLY earned in interest? 10%
  2. How many loans have defaulted? None
  3. Would I recommend them? Yes
Longer answers:

What have I REALLY earned in interest? 10%

The yields have varied because some loans have delayed payment. Delays are unfortunately a routine part of the P2P bridging loan process. On the plus side, a delay can often have nothing to do with the final repayment of a loan. In Lendy’s own words:

Delays can be caused by the slow completion of a property sale or a refinance with a bank, by complications with planning permission, or by any number of other minor issues. Both borrowers and lenders in the market understand that delays happen regularly, and price that in accordingly.”

I have to say that 10% ROI is still very respectful for doing next to no work.

How many loans have defaulted? None

Lendy* has just sent their customers an update on their loan performance to date.

There have been 98 loans to date that have been repaid to investors through Lendy since its inception.

  • 42 were repaid on time, and 56 were repaid late
  • A closer look at the late loans:
  • 34 were repaid under 90 days late
  • 13 were repaid between 90 and 180 days late
  • 9 were more than 180 days late

But how many loans have ended up in losses for Lendy investors? None so far – although that’s by no means a guarantee that it won’t ever happen.

 

Would I recommend them? Yes

Despite the yield being below 10% and the delay of more than half of the loans, I’m still very happy with their service to date. They send out a weekly company update and a bi-weekly loan update.

I would certainly recommend that everyone initially fills their £20,000 ISA allocation – in either Stocks and Shares or Innovative Finance ISA (ignore cash!) – but once filled, I feel this company offers a fantastic alternative to achieving high yields for little to no effort. They also offer a SIPP if the retirement pot appeals to you.

If you invest £1,000 @ 12% you’ll receive £10 per month / £120 per year.

If you reinvest that money, you stand to double your money in 6 years, triple it in 9.5 years and quadruple it in 12 years.

They’re a bigger platform that many of the other P2P platforms, and as such, their FSCS approval is taking longer. Once approved, they’re likely to offer an Innovative Finance ISA so you can earn the yields tax-free.

I plan on dripping the income and capital through as and when they get to that stage.

 

Are you interested in investing in Lendy*?

If you have any questions about their service, leave a comment below and I’ll give you my honest opinion.

*If you’re interested in investing in their services, you can join the website by clicking on the following  LINK. I will receive a commission if you join via the link, but please understand that it adds no cost to you and I only recommend them because I’ve found value in their service. Not because of the commissions I make if you decide to join them.

If you’re a fellow investor, please feel free to share your own experience with them – whether it supports my opinion or not.

14 Comments

  • I feel I’m leaving money on the table by investing in Zopa then. Having said that, there are 2 strong hands.

    1) It’s the only service to have gone through a financial recession and survived (default rates increased to ~5.5% and that’s ok).
    2) They’ve been around for many years which brings the expected and actual returns extremely close.

    But a 3.5% difference in investor’s returns seems quite high. I wonder why (?)

    Nice article. I intend to write a review about my experience with Zopa and Ratesetter pretty soon.

    • Huw Davies

      Reply Reply 12th May 2017

      Thanks for sharing your views Michael.

      Lendy’s yield is superior, but like you said, they aren’t ‘tried & tested’ like Zopa or Ratesetter. It’s down to the investor to make the call on reassurance vs yield.

      I was fortunate to have the advice from someone I trust. I also started a position with them as a trial. So far, I can’t complain about the results:
      – Strong yield (10%+)
      – Easy to use
      – No losses so far
      – Easy to exit if you need your money back – Didn’t mention that in the post!)

      • Yup, sounds good.

        What is the fee for early-exit Huw?

        Also, I suppose this is allowed only under certain circumstances. For example, there has to be demand from other investors to buy your loans and/or that’s possible only after the project completion?

        • Huw Davies

          Reply Reply 25th May 2017

          There is no exit fee, nor is there a fee for selling/buying loans on the secondary market. In my experience, the secondary market is very active. If your loans are at 12% and you have multiple months left to go on it, it’s likely to be taken up very quickly. Mine have gone within 30 mins in my minimal experience.

  • James McGrath

    Reply Reply 13th May 2017

    “No defaults” is somewhat subjective. The P2P Finance Association class a default as anything that’s not been repaid within 120 days of the due date, which is at least 9 loans by the numbers above.

    “No capital lost” is true, but when a provision fund is used to achieve that (which I believe was the case with at least one loan) that can distort the perceived risk.

    Personally I’ve only got a four-figure sum with them but I’m starting to unwind my position: more than half of loans being repaid late is concerning, and it doesn’t take too many to go wrong before a rush for the exits is triggered.

    10%+ returns are always going to be anything but risk-free, but I don’t consider the interest rate premium over other platforms to be sufficient reward for the risk here.

    • Huw Davies

      Reply Reply 13th May 2017

      Hi James,

      Thanks for sharing your views.

      My risk tolerance is higher than most people, but I certainly don’t want to lose money. I’m open to high yields and little work. The ‘no capital lost’ so far was definitely reassuring, to a degree, for me.

      I’m probably like anyone else in that I don’t like late loans, but when you’re investing in bridging loans within property development they’re very likely to happen. Late loans & defaulted loans sit very differently to me.

      I would prefer for their clean payout rate to continue and the late loans increase rather than see a reduction in the number of late loans and the arrival of some defaults.

      Do you mind me asking where you plan on putting your money instead of Lendy?

      I have money in one other P2P lender MoneyThing. Once again, I’ve also been very happy with them. The yield is marginally lower and there are fewer loans. On the plus side, they’ve been given the go-ahead for an IF ISA (as they’re a slightly smaller firm), which might be out later this financial year or the start of the next year.

      I agree, any yield over 10% is going to carry some risks with it. I’d be interested to hear what platforms you believe to have superior risk/reward.

      Thanks again
      Huw

  • Dividend Diplomats

    Reply Reply 24th May 2017

    Thanks for sharing your story. First time commenting on your blog here. Glad to see that no one defaulted on your loans. However, those delinquency figures in your article cause my stomach to turn a little bit. I’m shocked why there were 9 loans that were 180 days that didn’t default. Do they provide you information for why the loans are 90+ days past due and what their remediation plan is for becoming current on your payments?

    Bert

    • Huw Davies

      Reply Reply 25th May 2017

      Hi Bert,
      You receive bi-weekly loan updates, which have varying degrees of detail. It’s often very general. They also have a call centre where I assume you could request more information (not sure if you’d get it).
      I’ve only invested money I can afford to lose, and I limit the amount of capital I put into each loan to minimise default impact.

  • James McGrath

    Reply Reply 25th May 2017

    Late loans do happen, but having more than half of your loans repaying late isn’t normal. For the first 90 days Lendy fund the interest themselves, which could put pressure on the platform’s solvency. After 90 days it accrues to the investor – which is fine, but is effectively increasing the LTV so you’re less likely to get your full interest if there’s a forced sale.

    For P2P, I think the key is diversification between and within platforms. Within that mix there’s a place for loans with a Lendy-esque risk profile, but their record concerns me too much to continue investing.

    • Huw Davies

      Reply Reply 25th May 2017

      Well said James, I totally agree.

      I haven’t mentioned diversification across platforms, but you’re spot on. The P2P bridging loan model is being replicated, and there are some companies I wouldn’t be comfortable in investing with. My experience with Lendy and MoneyThing have been satisfying so far, and I don’t plan on expanding my P2P allocation more than what income it provides me.

  • Claire

    Reply Reply 1st July 2017

    What do you do about declaring Tax to HMRC for P2P loans?

    Are the monthly repayments considered part of the £1000 annual interest we are allowed to receive and don’t have to fill in a Self Assessment? Or would I need to sign up for Self Assessment?

    Because I honestly don’t know what I have to do to start investing on platforms like Ratesetter, Lendy or propertymoose.

    The last thing I want is HMRC on my backside and/or having to get an accountant because I “earned” a pittance.

    Having an ISA (this year) isn’t possible as I have a S&S ISA already open and want to try and benefit from something like Ratesetter, Lendy or Property Crowdfunds. But I have this image of spending more out because I now have to pay an accountant and extra tax!

    • Huw Davies

      Reply Reply 1st July 2017

      Hi Claire,

      Currently, I don’t withdraw any income from P2P, so I have nothing to declare from it.

      In the UK, we’re eligible to earn up to £11,300 tax-free. I don’t understand your full circumstances, so I’d prefer not to comment on whether you need to fill in a self assessment or not. Here’s a useful link that might help clear it up for you:
      http://www.litrg.org.uk/tax-guides/tax-basics/do-i-need-complete-tax-return

      You can open an new ISA every year if you wish, so long as you don’t pay into more than one stocks and shares ISA in the same tax year. I currently have 3 x stocks and shares ISA’s. Putting money into an IF ISA to benefit from a higher income makes sense too.

      I can sense your reservations about HMRC, so I would encourage you to give them a call. They’re very helpful, and will give you an honest answer. It doesn’t sound like you have to worry about an accountant or Self Asesment from the limited info I have, but don’t take my word for it. Call the HMRC, explain your circumstances and ask for their help.

      What I would say is, don’t let paying tax put you off investing. First of all, you have to earn a lot of money through investments before you have to declare anything, and the ISA is an excellent opportunity to bypass that whole concern.

      Best of luck CLaire!

      • Claire

        Reply Reply 2nd July 2017

        Thanks for replying. I have bookmarked the link to have a little read and refer to.
        The Tax man is like having a toddler following you around asking you to share. And the sharing is only ever one way.

        • Huw Davies

          Reply Reply 4th July 2017

          I like that! 🙂

          The key for me is maximising the few tax-free benefits we have (ie. loading up the Stocks and shares ISA), and earning more than enough that tax is less relevant.

          I’m not sure how many people are actually filling the £20,000 we’re permitted each year into an ISA (and I’m aware that most people can’t afford to fill it). But for me, it’s a financial priority.

          I’m in effect creating a massive nut-flavoured brownie for myself that the toddler (tax man) can’t touch due to an allergy. Mmmmmm, yummy nut brownie! 🙂

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