Bridging finance

London: LendInvest, which claims to be the world’s largest crowdfunding mortgage marketplace, has injected £121 million into the UK mortgage market since it launched last May.

LendInvest is the offspring of funds management business Montello. Having started off by channelling investors’ cash into short-term bridging lending, founder Christian Faes first began to contemplate opening up to smaller retail investors around three years ago.

The result, LendInvest, takes cash from Montello investors alongside the funds it raises directly from small online investors. It is now Britain’s fourth-largest p2p (peer-to-peer) lender, offering average returns of 7.8 per cent and an average term length of six months at up to 75 per cent loan-to-value (LTV).

It focuses on short-term loans, also known as bridging finance, which enable landlords to take advantage of the sale of homes at auctions.

Speed is a vital part of its success so far, according to Faes. “We can provide funding within two weeks, whereas standard buy-to-let lending takes three to six months to put in place,” he says. “Many landlords buy at auctions where there is a 28-day completion period for the successful bidder.”

Television celebrity Kevin McCloud (pictured below) — best-known for his Channel 4 programme about self-builders, Grand Designs — turned to crowdfunding to raise finance for his house building business, HAB.

Investors last year backed him with £1.9m through Crowdcube — one of the biggest crowdfunded investments ever made.

The money will finance the growth of the business, which was set up in 2007 and develops custom-built homes. Through Crowdcube it now has 649 investors who have contributed between £100 and £150,000 each and collectively own a quarter of the equity in the business.

HAB has promised to pay them a dividend representing a 5 per cent yield on their investment by the end of 2016.

HAB managing director Mike Roberts says they turned to crowdfunding because its ethos matched HAB’s business philosophy. “We are about putting people at the heart of the development process, rather than using standardised designs,” he says.

— Financial Times