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New Easy ISA targets 4.05%

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easyMoney is launching a new Innovative Finance ISA, targeting an interest rate of 4.05%.

The ISA invests in loans to commercial and residential mortgages. The group’s origination team lend money to professional developers and buy-to-let investors. The income comes from their loan repayments. All loans are secured by a first legal charge over a property.

The group said the new ISA is aimed at investors who ‘have had enough of the poor interest rates offered by cash ISAs and are nervous about the potential volatility of most Stocks & Shares ISAs.’ However, investors should note that the ISA is not protected by the Financial Services Compensation Scheme (FSCS) and the income is not guaranteed.

easyMoney has ‘easyMoney plus’ credit card, which gives discounts of between 3%-55% at over 100 UK retailers, including John Lewis and Marks & Spencer.

Andrew de Candole, CEO of easyMoney, said: “Financial services in the UK are in desperate need of a shake-up. Like European air travel 23 years ago, the ISA market is crying out for someone to give everyday investors more for their money.

“We’re offering a clear, simple alternative to a cash ISA for investors looking for real returns in exchange for a little more risk. The inflation-busting interest rates we target are streets ahead of anything the banks could contemplate.”

Your Money View:

While it’s nice to have an investment with perks, EasyMoney appear to suggest that this is ‘only a little more risky’ than a Cash ISA, which it really isn’t.

Loans to property developers are some way from putting cash with a bank and the lack of FSCS backing should give potential investors pause for thought. Yes, the max loan-to-value is 70% and yes, the origination team are experienced, but 4.05% is only a ‘target’. The income is not guaranteed, nor is your capital. Is it really worth it for an income of 4.05%?

We’d rather take our chances on the stock market.

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