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New peer-to-peer lender targets 7.5% return with education loans

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Lendwise, a new peer-to-peer lender, aims to pair investors with students and professionals who are looking to fund postgraduate education or professional qualifications.

The peer-to-peer lender believes lending across high street banks for higher education is close to non-existent and is hoping to fill this gap. It noted that loans provided at reasonable rates or terms for educational purposes can provide graduates and professionals with the opportunity to enhance their skills and increase their earnings capability.

Lendwise plans to offer borrowers loans of up to £100,000, with interest rates ranging from 7.5% to 12%. Pricing will be based on a range of factors, which the peer-to-peer lender said go beyond the applicant’s financial profile and credit record. They include the specific postgraduate or professional qualification course they are taking, the length of study and the repayment period.

All prospective borrowers will undergo a rigorous credit assessment based on their financial background and credit history. Meanwhile, Lendwise will also forecast their potential future career earnings by drawing on data from third-party sources like employability reports.

Loan applicants who are in full-time education do not need to start repaying their loans until they finish their course, which means they are able to concentrate on their studies. They will also be able to repay their loan early.

Target returns

Lendwise estimates that returns should start around 7.5% per year and could increase to 10% per year. The lender will provide finance to different study fields and universities, as well as for courses of different timeframes, to enable investors to diversify their lending portfolios and reduce risk.

Lendwise will also provide investors with ‘autolend’ and loan filter features to allow them to create a portfolio that matches investors their lending criteria, risk appetite and investment objectives.

The new lender charges borrowers an origination fee of 2% of the total loan amount, which normally gets added to the loan amount, with a minimum fee of £250. Investors pay an ongoing fee to Lendwise for servicing the loan throughout the process, which amounts to a 2% margin on the interest portion of any monthly repayments received.

The new peer-to-peer lender is regulated by the Financial Conduct Authority and has been set up by Ioannis Georgiou, Kypros Mouzouros, Evangelos Skianis and Rishi Zaveri, who have all worked across the banking, finance and IT sectors.

Chief executive Zaveri commented: “Education finance is not an afterthought for Lendwise. We are a specialised platform created to serve aspiring individuals. At the same time, Lendwise offers investors access to a socially responsible and impact investment opportunity in the future prospects of the best and brightest individuals.”