Kuflink Ltd launched in August 2016 as a P2P bridging loan platform. The company is owned by Kuflink Group PLC who already owned a profitable bridging loan company, Kuflink Bridging Ltd. Kuflink Bridging Ltd now co-invests a minimum of 5% in each Select-Invest opportunity, whilst the parent company Kuflink Group PLC accepts the first 5%/20% of loss on all Auto-Select and Select-Invest loans respectively. To date (February 2019), the company boasts that there have been no investor losses since the business started.
We present a brief summary of the Kuflink proposition below along with a more comprehensive Kuflink review and Q&A underneath. If you find my review useful and choose to sign-up after reading, I would really appreciate if you would sign-up via my referral link.
Kuflink - P2P Bridging Loans
P2P Platform: Kuflink
Summary of investment: All investments made on the Kuflink platform are in UK property bridging loans (secured via first or second charges on the underlying property).
Cashback offer: £50 (10%)
Minimum investment required for cashback: £500
Time in business
Skin in the game – Parent company accepts first 5%/20% of loss on Auto-Select and Select-Invest loans respectively.
All loans are secured with first or second charges against UK property.
Interest is paid monthly on Select-Invest loans.
Investment dashboard is clear – no ambiguity in reporting. Accrued income is reported.
Good quality documentation available for each lending opportunity.
Secondary market is new and appears relatively inactive.
Interest paid annually on Auto-Invest loans.
Money is tied in for fixed period when investing in Auto-Invest loans.
Only Auto-Invest product can be purchased via the Innovative Finance ISA.
The below review/write-up (updated February 2019) is largely based on my own personal investing experience and interpretation of Kuflink’s investment terms. As always, please do your own due diligence before committing investment funds and consider whether investing in this platform is suitable for you based on your own individual financial circumstances.
I personally have funds invested in Kuflink’s P2P platform (see my current P2P investments here). All opinions are my own. Kuflink has not paid me to feature this article on my website; though should you sign-up via one of my referral links then I may receive a commission payment from Kuflink which does not impact the cashback or returns you personally receive from Kuflink in any way.
Where will my funds be invested?
All investments made on the Kuflink platform are in UK property bridging loans, secured via first or second charges on the underlying property.
What are bridging loans?
Bridging loans are a funding option used by property developers which can often be arranged at short notice. These loans typically feature higher interest repayments for the borrower reflecting the speed at which funds can be released (faster than traditional bank lending) and the perceived increased risk for the provider (e.g. bridging provider may sometimes be second in line in the event of default).
Property developers may seek to take out bridging loans for business purposes such as property refurbishment, acquisition of property or business assets or to improve cash flow.
Kuflink deals with bridging loans with the following key characteristics:
- Lending terms of between 1 and 24 months.
- Loans of between £50,000 and £750,000 are typically provided.
- Maximum LTV of 75%. This means that the maximum total lending against a property would be 75% (i.e. a borrower could borrow £75 if their house was valued at £100).
- Valuations used should be no more than three months old.
- Borrowers can be individuals or companies, though where borrowing is via a company, personal guarantees are required.
- Kuflink will only lend on freehold/long leasehold properties – not on properties with short lease terms.
- Borrowers must provide Kuflink with evidence of how they intend to repay the debt at the end of the loan term.
What different products does Kuflink offer?
- Select-Invest – Using the ‘Select-Invest’ offering, you manually select which bridging loans you invest in via the Kuflink platform. I selected this option for my investment as I wanted to understand which loans my money would be funding and wanted to select bridging loans with relatively low LTV percentages. Kuflink states the expected return for each individual loan – these rates are fixed provided the borrower continues to repay the loan.
- Auto-Invest – The ‘Auto-Invest’ offering currently features three different options; a 1 year fix, 3 year fix or 5 year fix. Kuflink notes higher expected returns where funds are committed for a longer term (between 5.0 to 7.0% p.a. gross returns cited when checked in February 2019). The benefit of ‘Auto-Invest’ is a fully hands-off approach whereby Kuflink will automatically diversify your funds across a range of loans, without you needing to individually select and monitor the loans you want exposure to.
- Innovative Finance ISA (IFISA) – Investments in the Kuflink IFISA are all made using ‘Auto-Invest’, except your funds will be held in a tax-free wrapper. There is currently no option to make ‘Select-Invest’ investments via the IFISA.
Does Kuflink invest in its own bridging loans?
Yes, Kuflink Bridging Ltd (owned by Kuflink Group PLC who also own 100% share capital of Kuflink Ltd) co-invests up to 20% of all Select-Invest property loans. In the four bridging loans I have invested in, Kuflink Bridging Limited co-invests 5%, 5%, 8% and 20% of the total loan. Personally, I really like this about Kuflink as the owners have more ‘skin in the game’.
How good is the Kuflink reporting on investment performance?
I find the Kuflink investment dashboard very straight-forward and easy to follow.
When logged into your account, you simply click ‘My Investments > My Investments’ in the top right hand corner followed by your chosen investment product (for me, ‘Select-Invest’). You are then shown the following screen detailing the investments you have made and the interest you have earned to date.
This interest is updated on a daily basis and is credited to your account on a monthly basis (Select-Invest). I’ve only recently made these investments and thus there isn’t much to update me on. However, if I click through to the individual investment pages; I am shown details of the investment made and a ‘Loan updates’ section which will later update me on the scheduled repayment of the loan. For instance; I can see that on another loan which I did not invest in, Kuflink have left the message “We have been working closely with this borrower to finalise repayment, which is expected in full by the end February 2019. We can confirm that the borrowers have already agreed a refinance.”
How frequently is interest paid on the money I invest in Kuflink?
As mentioned above; interest begins to accrue from the moment you invest in a bridging loan through the Kuflink platform. Interest generated is updated in your dashboard on a daily basis and is paid monthly (Select-Invest) or annually (Auto-Invest) depending on your choice of investment.
How long is my money tied in when I invest in Kuflink?
Kuflink offers term loans of between 1 and 24 months. Remember; Kuflink cannot guarantee that individual borrowers will make loan repayments on time, but you will continue to earn interest on your loan until the balance is repaid. The expected loan term is stated on each individual lending opportunity.
It may be possible to exit your loan early by reselling on Kuflink’s fledgling secondary market. See ‘how good is the secondary market on Kuflink’ section below.
Issues may also arise whereby a borrower does not repay on time. See the ‘Is money invested in Kuflink protected’ section below.
How good is the secondary market on Kuflink?
Kuflink launched its secondary market on 1 February 2019. Prices are fixed at the original price paid and there is a 0.25% seller fee automatically deducted upon completion of any sale. Buyers do not pay a fee for purchases made in the secondary market.
Loans must be sold in whole loan parts. This means that if you made a singular investment in a particular bridging loan, you must sell that entire investment. However, if you invested multiple times in a particular bridging loan, then you can sell your individual loans separately.
At the moment, there does not appear to be much activity in the secondary market. However, I expect this to pick up as the functionality becomes known.
Loans that are in arrears or about to be repaid (within one month) cannot be resold on the secondary market, which seems reasonable given loans cannot be sold at any premium/discount.
Is money invested in Kuflink protected?
Authorised status does not mean that money invested is covered by the FSCS protection scheme which applies to banks, building societies and credit unions only. However, it does provide some comfort as authorised firms must comply with client asset rules which set out how firms hold and control client money.
Generally, it’s important to remember that investing in P2P lending is riskier than putting your money into a savings account. The two key risks in my view are 1) the borrower does not repay on time and 2) Kuflink itself goes into administration. We discuss both of these scenarios below.
What happens if a borrower does not repay on time?
If a borrower does not repay on time, then it could just be a temporary issue. However, if it isn’t and the borrower defaults then Kuflink will look to protect investor’s interests. Where appropriate, a receiver can sell the secured property to generate funds to return investors capital and interest.
Kuflink Ltd’s parent company, Kuflink Group PLC, guarantees the first 20% of each Select-Invest loan on a first-loss basis and 5% for investments in Auto-Invest. This means that the first 5/20% of the loss will impact Kuflink Group PLC before it impacts investors’ money.
Clearly in the above scenario, there may be a delay in receiving capital and interest payments. Remember that despite the above mechanisms to retrieve funds in the event of a default, all capital should be considered at risk.
When last checked (February 2018), Kuflink proudly reports that there have been no investor losses since the businesses inception. Remember though, past performance is no guarantee of future returns.
Is Kuflink financially secure?
Kuflink Ltd (the company with whom you will be investing) has been operating since August 2016. It filed its full individual company accounts on 21 September 2017 for the 16-month period ending 30 June 2017 (link).
The latest publicly available accounts (FY17) were audited by Leigh Carr, a small London-based accountancy firm. Given the FY17 accounts only report on trading to June 2017, they do not tell us much about the current state of Kuflinks’ financial affairs as the business was very much in its start-up phase at this time. Reported revenue and gross profit were relatively low (£66,000 and £12,000 respectively), whilst operating expenses excluding depreciation totalled £863,000 resulting in an overall EBITDA loss of £(851,000). The majority of the cost base relates to employee expenditure of £575,000 (13 employees average). As Kuflink Ltd is a privately held company; the FY18 accounts are due 9 months from the period end date of 30 June 2018 (i.e. due 31 March 2019).
It is worth noting that Kuflink Ltd is 100% owned by Kuflink Group PLC, which also owns 100% of Kuflink Bridging Limited. Kuflink Group PLC’s consolidated performance was a lot stronger with reported revenue of £3.8 million, gross profit of £2.6 million and operating profit of £264,000 in the 18-month period ending 30 June 2017 (link). Similarly, the FY18 accounts are due to be filed by 31 March 2019.
How easy is the Kuflink sign-up process?
My experience was that it was very easy (link). As you would expect, the typical anti-money laundering checks are required, but once passed, your account can be open in minutes.
How can I pay money into my Kuflink account?
Unlike some P2P platforms which require manual payments to be made via your bank account, Kuflink is more flexible. You can deposit using your debit card with no fees attached.
How good is the feedback online for Kuflink?
Kuflink has strong feedback online with a TrustScore of 9/10 on TrustPilot based on 167 reviews (last checked February 2019).
What cashback does Kuflink offer its new investors?
Kuflink offers some of the best cashback terms in the industry (as a % of initial investment).
Current cashback rates offered are as follows:
- £50 cashback for investments between £500 and £999.99
- £100 cashback for investments of £1,000 – £4999
- £250 cashback for investments of £5,000+
I made my first investment of £500 in Kuflink on 22 January 2019. I received my £100 cashback in my Kuflink wallet on 6 February 2019 (12 working days later). The official terms state that cashback will be paid within 21 working days upon meeting minimum investment criteria.
If you do decide to invest and you have found this Kuflink review helpful; please do consider signing up via my referral link. This will enable me to continue paying for the running costs of this website.