The main risks with secured P2P lending are:

1. Borrower default
2. Mortgage fraud
3. Platform insolvency
4. Property market risk, and
5. Real estate risk
6. Illiquid instrument

Borrower default is the biggest risk and happens when a borrower does not repay his/her loan. This means that your capital is at risk.

Unlike most other P2P lending platforms, we only participate in secured lending which means that the total value of the loan is always secured against property. If the borrower does not repay their loan then we can sell the property to cover any shortfall. We only lend to borrowers who have good quality properties that we believe could be sold easily. However, please keep in mind that whilst the investment is backed by property, the value of the security depends on the value of the underlying property.

If a loan goes into default we will contact you to make you aware that your borrower is in default and explain the next steps of the enforcement process that we will manage on your behalf.

Mortgage fraud is when mortgages are obtained fraudulently.

Mortgage fraud usually involves individual(s) or organised criminal gangs and at least one corrupt associate, such as an accountant, solicitor or surveyor.

Mortgage fraud can include:

• over-valuing properties
• overstating a salary or income
• hijacking genuine conveyancing processes
• taking out mortgages in the name of unsuspecting individuals or those who are deceased after identity theft
• taking out a number of mortgages with different lenders on one address by manipulating Land Registry data
• changing title deeds without an owner’s knowledge to allow the sale of a property

We mitigate these risk in various ways, including:

• We undertake credit checks of the borrower(s) using Experian and/or CallCredit, the UK’s leading credit reference agencies
• Solicitors acting on behalf of investors perform separate identity checks on the borrower(s) and their solicitor
• We require the borrower(s) to meet personally with their solicitor and to sign the loan documentation in front of them

Platform insolvency is the risk that the company operating the lending platform goes out of business.

We have taken a number of steps to ensure that in the unlikely event of our insolvency, you would have full protection and all your loans would be serviced until maturity. These include;

1. All customer money that is not lent out are held in a segregated client money trust account with Royal Bank of Scotland PLC; and
2. The security provided by a borrower in favour of the loan is held by an independent security agent for the benefit of lenders.

Property market risk means that the borrowers' ability to pay interest and repay their loans could be affected if there was a downturn in the UK property market. We have established procedures to protect our lenders against this risk. These include a minimum rental income coverage, maximum LTV cap and other measures.

Interest rate risk means that general interest rates might rise above the interest rates that you are earning from your loans. We are mitigating this risk by only including loans with a short-term duration on our platform.