Famous for founding easyJet in 1995, Stelios Haji-Ioannou extended his ‘house of brands’, the easyGroup, with the launch of an Innovate Finance ISA (IFISA) back in February. Investors are offered the opportunity to invest in property backed, P2P loans, yielding an expected return of 4.05%.
In a statement, Stelios commented:
“Everyday investors in the UK have gone almost a decade without real interest rates. With the easyMoney Innovative Finance ISA, we’re offering something new and taking on the big boys.”
Whilst in the midst of the ISA season, we thought we’d explore the offering further.
|Loan Selection||Automatically diversified|
|Loan Type||Property loans, generally bridging finance. Terms of 3-24 months.|
|Security||Asset backed with a first charge, 70% LTV.|
|Secondary Market||Available, subject to demand.|
Investors will further become an easyMoney plus card holder, which provides discounts on cinema tickets and top retailers. Offering perks of this nature is unique in the market.
Who are the borrowers?
Although little data on the actual loans can be found, investors are lending to bridging type, property purposes. The maximum easyMoney lends against any property value is 70% and a 1st charge over the property is held. Loan terms range from 3-24 months.
Once invested, investors are provided with a dashboard showing key information on the loans, including a description, an amount and the balance. The rate the borrower pays is not, however, displayed or indicated, which should breed caution amongst investors. Bridging loans can be expensive for the borrowers, often in the region of 1 per cent per month plus any upfront fees. Although the dataset of the underlying loans is not available, the assumption would be that the margin easyMoney is taking is higher than normal mainstream P2P platforms, which range around 3-5%. If a borrower is paying 12%, a 4.05% return for the investor may not warrant the risk presented.
For more savvy investors who have the time and inclination, platforms such as MoneyThing or Ablrate allow investors to manually select bridging type loans offering far superior returns.
Invest across multiple major P2P platforms from one dashboard in minutes
There are two options for getting your money back when investing through easyMoney: wait until your loan matures or sell to other members on the platform. Investors can request to sell any loans which are performing as per their contract. As a new platform there may be concerns around the liquidity of the secondary market and the availability of new lenders to substitute the loan commitments of exiting lenders. However, it is described that a number of professional investors, who receive preferential rates, are on the platform providing larger sums of funding.
E-Money capital, trading as easyMoney, is authorised and regulated by the Financial Conduct Authority (231680). The company was originally incorporated back in 2003, initially offering credit cards and subsequently in 2005, car insurance. The P2P offering live at the moment is said to be the first product in a new range from easyMoney, with the company stating that more personal finance products are to come.
Andrew de Candole, an experienced property developer holds the position of CEO. He has built a successful career focused on developing luxury properties.
The ‘easyGroup’ brand is built on providing good value, no thrills services. The easyMoney product looks and feels like an easyGroup product but the low cost, no thrills value is not clearly represented. Although the easyMoney card offers perks unrivalled with competitors it does feel like an unnecessary add on. In comparison, nothing is for free on an easyJet flight. Certainly, the Innovate Finance ISA is straight forward to set up, aimed at the masses and is easy to invest in, but the loans sitting behind may be of a higher risk, which may challenge the value delivered.