Kuflink is a mid-sized P2P lender offering secured bridging and development loans (secured with first or second charges). It’s one of my favourite P2P platforms as the shareholders of the business have ‘skin in the game‘ in each Select-Invest deal which aligns interests and reduces investor risk.
If you read my Kuflink review and choose to invest, I would be grateful if you would sign-up via my referral link. If you are interested in bridging/development P2P platforms, you may also wish to read our Loanpad review.
Updated view in light of the ongoing Coronavirus pandemic (20/09/2020)
Kuflink has never promised its investors immediate liquidity and therefore it has not suffered from complaints throughout the crisis in the same way as platforms such as RateSetter or Lending Works. Given its underlying loans are granted to fund development activity, there would have been a period during lockdown whereby building works would have ceased which may result in delayed repayment of some loans. However, the property market itself is currently experiencing a boom in demand which is widely attributed to the stamp duty holiday announced by the Government which has increased my confidence in the Kuflink offering. Disclaimer: this does not consistute financial advice.
Kuflink - P2P Bridging Loans
Description: Kuflink operates a tiered cashback promotion. Invest £1,000 to get 2.5% cashback, £5,000 to get 3.0% cashback, £25,000 to get 3.5% cashback, £50,000 to get 3.75% cashback or £100,000 to get 4.0% cashback.
- Time in business
- Hands-off investing
Summary of key features
The key features of the Kuflink investment account are listed below.
|Launch date||2016 (though sister company, Kuflink Bridging Ltd has been operating since 2011)|
|Estimated annual returns||Up to 7.2%|
|Loan security||First or second charges over UK property|
|Provision fund||X - There is no provision fund, but the platform does have 'skin in the game' as Kuflinks' sister company, Kuflink Bridging Limited co-invests up to 5.0% of each Select-Invest loan|
|Auto re-investment||✓ Available if investing via Auto-Invest (rather than manually investing in specific opportunities)|
|Innovative Finance ISA||✓|
|Cashback offer||£50 if you invest £500 (10.0%), £100 if you invest £1000 (10.0%), £250 if you invest £5,000 (5.0%)|
Detailed Kuflink review
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 (still operating). Kuflink Bridging Ltd now co-invests a minimum of 5% in each Select-Invest opportunity. To date, the company boasts no investor losses.
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.
Each Select-Invest page clearly states the underlying security taken on each lending opportunity.
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 initial investment as I wanted to select bridging loans with the lowest LTV. Kuflink tends to have a strong pipeline of new loans coming onto the platform. The ‘Select-Invest’ page features a number of new investment opportunities (see dashboard example below).
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 (up to 7.0% p.a. gross returns cited). 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. Kuflink provides clear data showing investors which loans they are invested in (see below).
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 5% of all Select-Invest property loans. 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 ‘Portfolio’ on the left hand side. You are then shown the following screen detailing the investments you have made and the interest you have earned to date. Click ‘Self-Select’, ‘Auto-Select’ or ‘IFISA’ to see the investments held in each respective account.
If investing in Self-Select deals, interest is updated on a daily basis and is credited to your account on a monthly basis (Select-Invest). If you click through to the individual investment pages; you are shown details of the investment made (see example below). If you click the ‘Loan updates’ tab, you will find commentary providing updates on the scheduled repayment of the loan.
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 secondary market. See ‘how good is the secondary market on Kuflink’ section below.
When investing via Auto-Select or the Kuflink IFISA, your cash is tied in for a fixed period of time (1, 3 or 5 years) and your investment cannot be resold on the secondary market.
How good is the secondary market on Kuflink?
Kuflink launched its secondary market back in 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.
To test the waters, I sold a few relatively small loan chunks and these sold quickly for me. Remember that the existence of investors willing to purchase your investment is not a guarantee and I would always recommend focusing on the term of the underlying loans (12 to 24 months typically).
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.
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.
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 last audited statutory accounts on 22 March 2019 for the year ending 30 June 2018 (link).
The latest publicly available accounts (FY18) were audited by Ernst and Young, a Big 4 accountancy firm who issued an unqualified audit report (i.e. they agreed that the accounts were materially correct and agreed that the business would continue operating as a going concern for at least the next 12 month period).
The appointment of EY gives additional comfort over the financials being reported, with the business having previously been audited by Leigh Carr, a much smaller accountancy firm.
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.
What cashback does Kuflink offer its new investors?
Kuflink offers some of the best cashback terms in the industry (as a % of initial investment) – cashback is available if you sign-up via my referral link.
Current cashback rates offered are as follows:
- 2.5% cashback for investments between £1,000 and £4,999
- 3.0% cashback for investments between £5,000 and £24,999
- 3.5% cashback for investments between £25,000 and £49,999
- 3.75% cashback for investments between £50,000 and £99,999
- 4.0% cashback for investments of over £100,000 (capped)
I made my first investment in Kuflink back in January 2019 and received my cashback quickly with no issues.