LendInvest reduces bridge finance threshold

UK marketplace lender LendInvest has reduced its minimum loan size for commercial and residential property bridging loans as it attempts to roll out its real estate lending business across the UK regions.

The online property lending and investing business has dropped its minimum loan size across bridging finance products to £75,000, from £100,000, prompted by the recent launch of its operations in northern England and Scotland.

“By reducing our loan size, we will automatically open up the LendInvest proposition to more prospective borrowers working and investing in UK towns and cities far beyond London and the south east,” said Matthew Tooth, chief commercial officer at LendInvest.

Tooth added that the firm will aim to accelerate its lending activity throughout the UK during 2017.

The profile of typical loan applications is changing as lending activity spreads away from London and the south east to areas with lower average property values, the firm said.

LendInvest is one of several ‘marketplace lenders’ which have emerged in recent years to provide financing liquidity to the smaller end of the borrower spectrum. The company was spun out of Montello, a bridging finance lender, in 2013. LendInvest claims to now provides more than 10 percent of all short-term property finance in the UK.

A report published by Deloitte in May asked whether marketplace lending is a “temporary phenomenon”. The report concluded that such lending is enabling the rapid deployment of capital into hitherto restricted asset classes.

However, Deloitte argued that traditional banks’ low-cost funding models would ensure their continued competitive advantage: “This is likely to prove even more powerful when and if base rates rise. As a consequence, we do not foresee banks being systematically displaced from their core roles of lending to retail consumers and small businesses, and collecting deposits from those segments.”

The report added, however, that marketplace lenders are likely to secure a strong foothold in areas of the market where banks do not have the risk appetite to compete.

Since its launch, the company has originated more than £770 million of loans backed by a total of 2,600 residential properties across the UK. The finance has typically funded purchasing, renovation and development of properties.