Peer-to-peer lending platform Crowdproperty is offering property professionals up to 100% loan-to-value borrowing to fund buy to let and development projects.
The new online platform aims to lend 20 million pounds to property investors in the coming year.
The web site is building on the traditional crowdfunding platform that matches a pool of investors with a borrower pitching a project.
Crowdfunders have invested millions in new businesses in recent years.
Lenders put up a minimum stake of £500 in a property project.
If the borrower is seeking 100% funding, the interest rate paid is between 9% and 11%.
For loans up to 80% loan-to-value, the interest rate falls to between 5% and 6% for financing the deal.
Money is available for buying, refinancing and development.
Borrowers also have to pay an administration fee of 3% of their gross funding, while lenders are paid interest without tax deducted.
Crowdproperty is the brainchild of Property Investment Network founder Simon Zutshi.
“The idea for Crowdproperty comes from understanding that property professionals are facing a tough time raising finance from the banks and savers are not happy with low interest rates,” he said.
“More money needs to flow into property to get some of these unfunded projects off the ground. It seems sensible to match lenders who are dissatisfied with the interest rates on their savings with property professionals who need their money to make profits.”
Zutshi explained that all projects pitched on the platform will go through a strict due diligence process.
If a project fails to receive full funding, the deal is withdrawn.
Lenders are protected by Crowdproperty taking a first charge for the funding against the project property. The platform also monitors funded deals to make sure the borrowed money is only spent according to the terms of the loan agreement.
The platform is also investigating whether peer-to-peer lending can be wrapped in a tax-free ISA.