Home Best UK Peer to Peer Lending Sites & Rates 2021
Adam Green

Fintech is gradually revolutionizing the global finance scene – one of the most recent changes is Peer to Peer lending, which seeks to cut out the bank’s traditional role when it comes to giving out loans and other forms of personal cash to borrowers.

Instead of saving all your cash in a bank account that earns less than 2% interest or stressing over the best stock or if they should buy shares, you now have the option of earning in excess of 10%, passively, on the cash you deposit with an online P2P lender.

Best UK Peer to...

What is Peer to Peer Lending?

Peer-to-peer lending, also frequently referred to as P2P lending, involves lending money to individuals and companies through online services, which match lenders with borrowers.

Because peer-to-peer lending companies operate online, without a high-street presence, they have significantly smaller overheads, and this can then be passed on to consumers in more competitive interest rates and associated costs. The emphasis is on nimbleness, agility, and convenience, rather than the traditional, and sometimes stuffy, appearance of established financial sector organisations.

However, peer-to-peer lending also differs from the traditional alternative by being an investment opportunity that is frequently conducted for profit. Because of this, peer-to-peer landing is often characterised as being an alternative financial service. Also, although it was originally envisaged that peer-to-peer lenders would be entirely separate from the established financial architecture, as the sector has grown and developed, so partnerships have increasingly been sought with established players.

Lenders in the peer-to-peer sphere are also more likely to offer credit to those who struggle to acquire it from traditional financial institutions. This can particularly include younger people, and thus peer-to-peer companies, and fintechs in general, are often branded in such a way as to appeal to the millennial generation.

How does peer-to-peer lending work?

Considering the way that the peer-to-peer sector works, most P2P lenders provide online investment platforms, which enable borrowers to attract lenders, and investors to identify and purchase lending opportunities that meet their requirements. Peer-to-peer lenders have also developed their own independent credit models, which have enabled them to suitably price and deliver approval for loans.Best UK Peer to...

This is a rapidly developing sector, and thus a huge amount of competition has arisen in a fairly short timeframe. There are lots of peer-to-peer lenders competing for your custom, and attempting to separate the wheat from the chaff can be something of a baffling process. So in this article w’ere going to examine five of the top peer-to-peer lenders available, and explain exactly why you should opt for their services.

Why invest with a p2p lending website?

  • Not affected by stock markets: P2P lending institutions are listed with the stock exchanges. How much you make here is therefore not directly affected by fluctuation in the equity markets and can therefore be used as hedge against your share and stock interest.
  • Offer higher rates compared to shares and banks: Most savings accounts by banks have their interest rates way below 3%. Not even the fixed income securities offered by the corporate and treasury bonds can match the 10%+ interests rates offered by most peer to peer lenders.
  • You don’t need to be accredited investor: Most stock brokers won’t facilitate your share and equity investments if you aren’t an accredited investor. You, however, don’t have to be an accredited investor to deposit funds with a P2P lender.
  • 100% Passive income: Unlike such investments like stock and UK forex broker investments where you have to spend hours on end researching and analysing different products, P2P lending is 100% passive. Some lenders even have auto-investing tools that automatically redirect your paid principle and interests to the market.
  • Affordable minimum investments: While most investment vehicles currently available require huge initial deposit amounts, most P2P lenders have relatively affordable deposits, starting from £20.

What are the pros and cons of investing in a P2P scheme?


  • Some support goal based investing thus good for longer term projects like IRA savings
  • Most support secured investments ensuring you never lose your money
  • Some support secondary markets where you can quickly liquidate your investments in case of emergencies
  • Screening borrowers by the P2P company ensures you are booked with an individual or business that is least likely to default
  • In case of consistently failed payments, the company conducts follow ups and initiates recovery on your behalf


  • High incidences of defaulters, as much as 4% for U.K based Zopa in 2017
  • P2P instruments aren’t publicly traded making them hard to liquidate, especially were lenders don’t have secondary markets
  • Your returns here are treated as ordinary income and thus attract 15% tax
  • Where loans are unsecured, you stand to lose your investments in case of default given that most P2P lenders aren’t insured

Criteria used to rank the best P2P lenders

The P2P lending world is awash with countless lending sites, each claiming to have the best rates, and the most reliable services. How then did we identify the most reliable lenders that you can register and invest your funds with? Here are some of the aspects of the trade that we used to vet these P2P lenders:

  • Average annual return on investment
  • Are they regulated or not?
  • Management fees and trading cost
  • Ease of liquidating your investments (secondary markets)
  • Security of the invested loans
  • Regulation and reliability
  • Borrower’s vetting process
  • Follow up on late payments and defaulters
  • Acceptance of accredited/unaccredited investors

Best UK Peer to Peer Lending Sites 2021:

1. Property Partner – Up to 4-7% Avg Returns

Best UK Peer to...

If you are looking to invest in the UK real estate space but you don’t have the necessary cash to buy a house out-right, then you should seriously consider Property Partner. The platform essentially allows you to purchase a percentage of a property alongside other buyers. For example, if the property you are looking to buy is listed at a current market value of £250,000, and you only want to invest £2,500, then you would effectively own 1% of the house. As a result, you would earn income on the two fronts. Firstly, all properties listed for sale on the platform are rented out once the deal has concluded. This means that you will get your share of the monthly rental proceeds.

The proceeds are actually paid out to you on a set date every month, meaning that you can re-invest your income as soon as it arrives. The second income stream available is in the form of appreciation. This is where the value of the property increases over time. Now, once a property goes through the crowdfunding process on Property Partner, the platform usually looks to sell the house within five years.

Once the property is sold, you will get your money back at the current market rate. If we were to stick with the same example above you where you own 1% of a £250,000 house, if the same house sold for £300,000 five years later, you would get £3,000 back.

In terms of the fundamentals, the team at Property Property charge a 2% transaction fee every time you make an investment. While at first glance this might seem high, you have to remember that the team source all of the deals on your behalf, perform all of the necessary due diligence, and of course, manage the property.

Finally, in terms of how much you can expect to make, this will ultimately depend on the strength of the local housing market you invest in. However, you should expect annual rental yields of between 4-7%, alongside annual appreciation gains of around the same.


  • Revolutionary platform that allows you to invest in UK property from just £1,000
  • Platform find the deals for you and even manages the property on your behalf
  • Established since 2013
  • Earn monthly rental income
  • Earn capital gains when the value of the property increase
  • Secondary market to sell your property shares early


  • Liquidity on secondary market is still thin
  • Still uncertain what would happen to your funds if the platform no longer existed

2. The LendingCrowd – Avg 8.1% Annual Return

Best UK Peer to...

If you’re interested in lending money to small up and coming business based in the UK, then you might want to consider the LendingCrowd. The peer-to-peer platform matches you with British business that are looking for funding. The great thing about LendingCrowd is that the platform performs the due diligence on your behalf. In other words, before the business is listed on the platform for funding, the team will assess the creditworthiness of the business in question. Once this do, the company’s risk rating will be reflected in the annual yield.

The LendingCrowd claim that on average, investors make an annual return of 8.1%. This is very high, however, don’t forget that the risk of lending money to a newly established business is risky.When it comes to choosing an investment, you have two options. You can either select the individual loans that you want to back yourself, or alternatively, allow the LendingCrowd to invest on your behalf.

If you choose the latter, you can decide what sort of risk levels you want to take. You can get started with the LendingCrowd by investing just £20, which is great if you want to test the platform out first before injecting larger amounts. You can do this by debit card or bank transfer. The interest repayments are distributed to you monthly, which gives you the opportunity to re-invest them into other loans.

The fees that you pay to use the LendingCrowd platform can vary depending on the investment plan that you implement. Nevertheless, all investment plans come with a 1% ongoing repayment fee that is charged when your debtors make a payment. For example, if you lend out money at a rate of 10%, you will receive 9% once the platform has taken its fee. The only other fee that you need to be made aware of is the 1% withdrawal fee. This is only charged if you allow the LendingCrowd to invest on your behalf.


  • Loan money to small British businesses
  • Earn high yields of 8.1%
  • Interest is paid monthly
  • The LendingCrowd perform due diligence on borrows on your behalf
  • Invest in a loan from just £20
  • No withdrawal fee if you choose your own investment
  • Platform can choose investments on your behalf


  • Higher risk as lending money to companies with a short track record
  • 1% withdrawal fee if you allow LendingCrowd to invest on your behalf

3. PropertyCrowd – Avg 11% Return

Best UK Peer to...

PropertyCrowd While we have already discussed peer-to-peer property investing via Property Partner, the PropertyCrowd platform does things different. In a nutshell, the platform allows you to loan money to property developers that need to raise cash to fund a new building project. These projects are usually significant in size, and centre on multi-family homes and student accommodation complexes.

Much like in the case of Property Partner, the fundraising process is based on crowdfunding. In other words, you can back a loan with a minimum investment of just £900. The underlying asset is classed as property bond, which will allow you to earn interest payments. Now, it is important to note that the risks associated with lending money to property developers is somewhat high.

While the team at PropertyCrowd crowd perform the required due diligence on the creditworthiness of the debtor, there is always the risk that the company might default. As a result, these higher risk levels are reflected in the annual yields on offer. PropertyCrowd claim that the average yield on offer sits in the 11% region, which is very high.

When it comes to investing process itself, you have the option of choosing loans that you feel comfortable backing. The yields on each deal will ultimately vary depending on the risk profile of the company obtaining the loan.

The higher paying yields are tied to Mezzanine assets, meaning that the investment is secured by a second legal charge on the property title. In layman terms, this means you are second in-line if the debtor defaulted on their repayments. For a slightly lower risk profile, senior debt loans are secured by a first legal charge. As a result, should the debtor default, you would first in-line in recouping your money.


  • Average annual returns of 11%, which is very high
  • Passive income as no need to do anything once you invest
  • Choose the loans that you want to back
  • Good for short-term investing
  • Minimum investment of just £900
  • PropertyCrowd perform due diligence on borrowers before being listed on platform


  • High risk asset class
  • Unclear on fee structure

4. CapitalRise

Best UK Peer to...

CapitalRise is another leading peer-to-peer platform that specializes in finance property development projects. Launched in 2015, the UK-based platform claims to now have over £300 million under management. Much like in the case of Property Crowd, the platform allows you to loan money to property developers. There are three main types of loans that you can invest in, each with their own risk profiles.

You can either back a loan to complete a development project, finance a development loan already in existence, or loan the acquisition of a property. The platform claims to offer in the region of 10% per year in average returns. This once again reflects the higher-than-usual risk levels associated with CapitalRise loans. The platform is also IFISA eligible, meaning you can make some smart tax savings. In order to get started with CapitalRise you will need to make a minimum investment of £1,000. Even better, there are no fees to invest.

In terms of eligibility, you will need to hold a UK bank account, and you cannot invest more than 10% of your net assets. Once you’ve made an investment, you will receive regular interest when the debtor makes their repayments. However, the time frequency of these interest payments will depend on the specific deal you back. At the end of the loan period, you will then receive your original investment back in full.


Note: You should attempt to diversify as much as possible when investing with CapitalRise. While it is true that the interest yields on offer are high, the loans are high-risk. By spreading your investments across multiple loans, a potential default won't be as devastating had you put all of your eggs into one basket.


  • Average yearly returns of 10%
  • No fees to invest
  • Opportunity to diversify across multiple loans
  • Platform performs stringent due diligence on its borrowers
  • Great for beginners
  • Link your platform earnings to your ISA


  • Chance that debtors could default on their repayments

5. Zopa

Best UK Peer to...

Launched way back in 2005, Zopa is often regarded as the original peer-to-peer lending platform in the UK. The platform specializes in facilitating peer-to-peer loans to UK consumers that are looking for an alternative to traditional lenders. Borrowers will apply for a loan through the Zopa website, and then the platform will carry out their credit rating checks.

The interest yields that you earn will therefore depend on the underlying risk of the borrower. However, on average this pays in the region o f 4-5% per year. The great thing about Zopa is that loans are backed in £10 blocks. This means that you have the chance to spread your risk across hundreds, if not thousands of individual loans. In doing so, you can significantly reduce the risk you undertake. On the other hand, you will need to invest a minimum of £1,000 to get started, although this is still reasonable. You also have the chance to withdraw your funds early with some loans, although you will have to pay a 1% fee for this.

When it comes to fees, you’ll be pleased to know that lenders are charged nothing when parting with their case. The platform instead makes it money from borrowers, much of which, we would assume, is in the form of an origination fee.

The slight downside to Zopa is the way it recently changed its default policy. Previously, Zopa would create a reserve fund, which it would then use in the event of a default. However, this is no longer in place, meaning that you as the investor will have to cover any subsequent default. Nevertheless, this is now standard practice in the peer-to-peer lending space.


  • Minimum investment of just £1,000
  • Loans of split into blocks of £10, meaning you can diversify with ease
  • Very user-friendly platform
  • First UK peer-to-peer lending site
  • Established since 2005
  • Good reputation
  • No fees


  •  Default reserve fund no longer in operation

Bottom line

There exist countless peer to peer lending websites that won’t just help you earn a steady income from your investment but will also help you save towards a particular goal. You just need to learn how to differentiate between reliable and unreliable lenders. On this list, we include what we consider the best in terms of high returns, guarantee for your investments, lowest minimum investment, liquidity in case emergencies, and support for goal saving. Start by figuring out your priorities and matching them with the most suitable lender. For instance, do you want to invest your cash but still have quick access to it in case of emergencies? Invest in P2P brands with active secondary markets.


How do peer-to-peer lenders make money?

Peer-to-peer platforms generate origination fees that are charged to borrowers, while interest charges also accumulate further revenue. In this respect, peer-to-peer lenders are not too different from traditional bank loans.

Are P2P platforms regulated?
The worst mistake any investor can make is to join and commit their money in funding ventures on a platform that’s not legally regulated. An unregulated business environment has all the hallmarks of a black market, and that means that the risk of you losing loads of money is optimal. Why would anyone want that?
Luckily, peer-to-peer platforms are regulated by the relevant authorities in the countries where they operate. In the event that you want some help in sorting out an issue, you can contact the Securities and Exchanges Commission or any other national body tasked with overseeing the platforms.

Can I diversify across different borrowers?
In an environment as active as a lending platform, you bump into all sorts of loan requests spread across a number of different lending options. You can spread your investments across these options and stand to gain by reducing the risk of loss and increasing your overall investment volume. Also, you boost your turnover and money circulation around various lending drives.

In essence, the trick is to avoid funding any loans in full. That way, you reduce the amount of your money exposed to a single risk. If one loses a small amount, the interest gained from the rest can always cover it and cushion you from a net loss.

Do I have to contribute the full amount of a borrowers investment?
When you join a peer-to-peer lending platform as an investor, you have a choice to either fund a borrower’s guaranteed approval loan in full or contribute an amount to it. The latter plays out when different investors release proportions of their money to partially fund one person’s loan. The interest paid on the full amount is then distributed to the involved lenders respective of their contribution amounts.

Whenever you come across a loan request that interests you, you can always contribute to it as opposed to footing the whole bill.

Is there any government protection for peer-to-peer lending?

No. Unlike bank and building society savings, any money lent via P2P websites is not covered by the Financial Services Compensation Scheme, nor any equivalent government schemes. The Financial Conduct Authority is regulating P2P lending, and there is now a requirement for lenders’ money to be ring-fenced. But some peer-to-peer lenders have still hit problems, and this can definitely impact on those who choose to borrow from these companies.

What are the risks associated with peer-to-peer landing?

Firstly, there is a risk of default, and as we have just mentioned this would not be covered by any government support. While several peer-to-peer lenders have contingency and provision funds, the risk is still clearly higher than with a traditional high-street bank, for example.

Another potentially serious issue is that the peer-to-peer lending site that you choose could go bust. Several such companies have gone out of business previously, which is why we have recommended several of the best current peer-to-peer lenders here.

For one, many investors love the peer-to-peer lending arrangement by virtue of its good profits. They get to rake in some nice interest from their investments while the borrower gets a loan at low cost. In fact, the interest you get from peer-to-peer lending deals could well be higher than what you could get by investing with banks.

Is money earned through peer-to-peer lending taxable?

Usually, yes. It is almost always the case that money and through peer-to-peer lending is classified as income, and therefore is taxable, assuming that you reach your personal allowance for a given tax year. £1,000 worth of interest every year is tax-free in the UK, though, so in the current low interest rate environment, this won’t impact on many people. However, it should be noted that higher rate tax payers are only afforded an allowance of £500, so this is more likely to impact on you if you have a significant level of income.

Does peer-to-peer lending show up on your credit report?

Yes. If you apply for a loan with any peer-to-peer lender, your credit report will definitely be checked. This will then create a hard credit check on your credit file, which will remain for a period of one year. It is possible, as with any credit application, that this could then temporarily reduce your credit score. And, of course, rejections for peer-to-peer loans are more likely to reduce your credit score further still.

What is peer-to-peer business lending?

Many peer-to-peer websites offer loans to businesses, which tend to pay the highest rates of return for investors. There are a wide variety of providers available on the market in this sphere, and all of the facets of personal and peer-to-peer lending apply similarly to the business market. With many smaller businesses struggling to acquire credit from traditional financial institutions, it is expected that peer-to-peer business lending will continue to grow in the coming years.

Can I withdraw money from my P2P account?

This is often only allowed at the end of the financial term, but is dependent on the terms and conditions associated with the individual lender. Furthermore, it is sometimes possible to sell your investments to another investor in order to get your money back.

Can I find out how stable a P2P company is before I invest?

Yes, although this differs slightly to the way that traditional financial institutions are assessed. It is possible to research the percentage of completed repayments that lenders have had from previous investments, which is usually publicised on the company’s website.

How can I reduce the risk to my money in P2P?

Aside from following the tips and advice contained in this article, the best way is to invest your money with several borrowers, which will reduce the risk that your money will never be repaid.

Adam Green

Adam Green

Adam Green is an experienced writer and fintech enthusiast. He he worked with LearnBonds.com since 2019 and covers a range of areas including: personal finance, savings, bonds and taxes.

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