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Marcus Morrison
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September 23, 2017

The untapped potential of peer-to-peer lending

When Stuart Wills moved from insurance to investment brokering, peer-to-peer lending for large loans wasn’t something he’d ever considered.

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“I’d only seen a little bit of what was happening in America and the likes,” he says.

 

“I liked the concept because it kind of chopped out the middleman, but I hadn’t really thought about it for a large, mortgage-type project.”

 

20 years on with several Zagga peer-to-peer success stories under his belt, its safe to say Stuart’s perspective has changed for good.

 

Zagga is an online platform matching serious investors to borrowers with real goals – a place where Kiwis pitch in to help each other out. Zagga lending criteria is more flexible than traditional investment options, and every loan is secured by mortgages on real property.

 

It’s a new way to look at investing, and it means brokers like Stuart can feel confident recommending peer-to-peer lending to clients as a stable, viable option.

 

“They did a presentation at a mortgage broker conference I was at and it just made sense. You had an investor on one side of the fence and a buyer that needed money on the other and it wasn’t as constrained by bank rules - they were a little more open to being logical,” Stuart says.

 

For Stuart, the true value of a lending platform like Zagga became clear when he met a client the banks weren’t willing to fund. “Often the banks really ignore the client’s needs or situation, they just fit every client into the same box and that won’t always work.,” he says.

 

Because Zagga offers flexible lending criteria and larger loan sizes, they accommodate borrower and investor needs on a case-by-case basis. They helped Stuart facilitate a long-term funding fix and competitive interest rate for his client.

 

Stuart says the project itself “all went to plan”, funded in full and settled smoothly. It meant easy business for him, and peace of mind for his client too.

 

In fact, Stuart’s first foray into Zagga investing worked so smoothly he was left wondering why more brokers hadn’t recommended it sooner. While it’s now a firm fixture on his finance radar, Stuart says for now the power of peer-to-peer platforms remain largely untapped.

 

“It’s that fear of the unknown. Rightly or wrongly people trust banks – they’re an institution that people have grown up with, they know what a bank is,” he says.

 

“People borrow off family and friends, it’s the oldest concept in the world really. It’s actually less risk because as an investor you can split up your lending to 20 people instead of one, and it’s secure because everything’s property-backed.

 

Simply put, Stuart’s advice to borrowers, investors and brokers alike is ‘just give it a go’.

 

“I just think it’s one of those sorts of things that people should be open to go and have a look at, on both sides of the fence,” he concludes.

 

“For those people who’ve got money to lend it’s certainly a better option than sitting it in the bank. For those who want to borrow money but don’t quite fit the bank criteria, it’d be worth talking to their broker and asking if they’ve ever considered peer-to-peer.”

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