Five ways Loanpad helps protect your investment

All investments come with an element of risk attached. A stocks and shares portfolio can crash overnight, while newer alternatives such as cryptocurrency are notoriously volatile.

In peer-to-peer lending, the key risk is that the borrower could be unable to repay their loan. This would result in a default, and may result in investor losses, including capital losses.

However, at Loanpad, we have set a few key processes in place that reduce the risks for our investors and help to protect your investments.

1. All of our loans are backed by property

    

We take collateral on every loan so that in the event of a borrower default, the underlying property collateral can be sold to recoup our investors’ collateral. Before any new loan is approved, we ensure that the underlying property collateral has a good chance of being sold in a timely manner if need be.

2. First charge on every loan

    

A first charge is a legal right that gives one lender priority over others to claim money from a property if the borrower defaults. Loanpad takes a first charge on every loan, so we will be first in line to be paid if a loan goes into recovery proceedings. This is important as it gives us the best possible chance of being able to make our investors complete by repaying their capital investment. This is one of the reasons why Loanpad investors have not lost a single penny of their capital to date.

3. Low LTVs

    

Loan-to-Value (LTV) is the percentage of a property’s value that you’re borrowing. For example, if you buy a house worth £100,000 and borrow £80,000, your LTV is 80 percent. The higher the LTV, the riskier the loan for the lender. Loanpad maintains very low LTVs in order to minimise lender risk. As of July 2025, the average Loanpad LTV was 44.46 percent. This means that the value of the property would have to decline by 55.54 per cent before our ability to recoup the capital investment is affected.

4. Senior lending position

    

Loanpad’s lending model brings together established property lenders and retail investors, with the property lenders taking on the highest risk – or junior – part of each loan. Our retail investors invest in the senior part of the loan, which means that they are effectively shielded from the riskiest parts of the loan, but can still earn competitive returns. If a loan goes bad, the property lenders will incur the greatest losses, while the retail investors will be repaid first.

5. Ongoing due diligence

Every new loan that is onboarded to the Loanpad site is subject to intensive due diligence focusing on property valuations, borrower experience, and the legal and security aspects of each loan. This due diligence continues even after the loan has been approved, to ensure that the borrower is still able to make repayments, and that everything is going according to plan. By keeping such a close eye on every loan, Loanpad is able to actively manage the loanbook and identify any potential problems ahead of time.