Why Does Loanpad Cap the Classic Account at £20,000 and Premium at £250,000?

Understanding Loanpad’s account limits starts with knowing what’s on offer. There are two accounts available to Loanpad investors: the Classic Account and the Premium Account. These two accounts offer similar investment strategies in that they both allow investors to finance property-backed loans and earn interest payments for the duration of the loan, before recouping the capital investment at the end. They both also come with the same risk – that the borrower could potentially default on the payment placing investor capital at risk. Both accounts are managed by the same team, with the same level of due diligence applied throughout the loan term.

However, there are a few key differences in the two accounts. The first is the liquidity available. The Classic Account allows investors to access funds daily and make withdrawals whenever they choose. The Premium Account requires 60 days’ notice before any withdrawals are made. To compensate for the longer notice period, the Premium Account targets a higher rate of interest – currently 5.8%, compared with 5% for the Classic Account.

The other key difference is the maximum allowable investment.

Why does the Classic Account have an investment cap of £20,000?

Our Classic Account was designed for retail investors seeking more short-term access to liquidity offer access to the property-lending market with as little as 1p. Our aim has always been to democratise financial investments, and we wanted to make it as easy as possible for the average person to use our accounts and invest in our property loans. This is also why we offer daily liquidity to Classic Account holders.

Both our Classic and Premium Accounts are eligible to be held within the ISA wrapper, which is currently capped at £20,000 per tax year. This means that retail investors can invest as much of their ISA allowance as they want within our platform, without risking over-investment and finding that some of their returns are subject to taxation.

Why Does the Premium Account Have an Investment Cap of £250,000?

Our Premium Account is best suited to investors who can afford to lock away their money for a little longer. They will also be less likely to need access to these funds in a hurry, and can therefore wait for 60 days before making a withdrawal. We actually find that many of these investors prefer to reinvest their funds, rather than withdrawing them.

In short, the Classic Account is designed around access, while the Premium Account is designed around a combination of larger investment capacity and a longer liquidity horizon.

Will Loanpad’s Account Limits Change?

All of Loanpad’s maximum limits can change and, in certain circumstances, we may agree to increase the Premium limit for individual investors. However, any changes will always be clearly communicated to our investors well in advance.