If you've money to invest but can't find a savings account that offers a decent return, it could be time to think outside the box and give peer-to-peer lending a go.
And if you've £3,000 or more to lend for three to five years, they are not only offering a return of up to 6.32%, but also a free iPad mini 2 for customers who apply exclusively through MoneySuperMarket.
Before we go into that that, here's a quick recap of how peer-to-peer lending works.
What is peer-to-peer lending?
Peer-to-peer lending is a regulated way to lend money directly to individuals or businesses and cut out the need for banks and building societies.
Wellesley & Co is a peer-to-peer lending platform that specialises in this asset-backed lending to small businesses and individuals, so you could see your money loaned to investors in a residential property, and it will also commit its own money alongside yours.
Obviously, there is a risk involved in all investments, but Wellesley does take steps to minimise the risks, including spreading your investment across its whole portfolio and securing loans against assets such as a property – if a borrower doesn't then repay the loan, the property could be sold to recover losses.
And peer-to-peer lending has been regulated by the Financial Conduct Authority (FCA) since April 2014, meaning all lenders are subject to certain rules. On the downside, your investment won't be covered by the Financial Compensation Services Scheme (FSCS) which protects the first £85,000 (dropping to £75,000 in January) saved with each bank or building society should they go bust.
So, what is Wellesley & Co offering?
What's the deal?
If you apply for one of Welleseley & Co's fixed rate term accounts through MoneySuperMarket before 5pm on December 11, you'll get a free iPad mini 2, worth £219.
You'll also need to commit £3,000 or more for either three or five years, and in return you'll receive an interest rate of up to 6.32% per annum (pa), which can be paid in monthly or on maturity, as shown in the table below:
Once you've committed your money the iPad mini 2 will be delivered to you within 21 working days. Terms and conditions apply.
What to watch out for
The key conditions of this deal are that you must apply through MoneySuperMarket and commit at least £3,000 for at least three years, though you may be able to access your money if necessary through Wellesley's Early Access Facitlity.
Getting your money early will depend on whether another lender is willing to take your place at the same rate and on the same terms, or whether Wellesley & Co has the funds to buy back the loans your money has been matched to.
You'll also lose out on some interest and, if you've taken up the iPad offer, Wellesley & Co reserves the right to take £219 from your balance.
And because peer-to-peer accounts pay returns before tax, you'll have to declare any interest you earn in a self-assessment tax return.
Is it for you?
If you want to get a better return on your investment than those offered by traditional savings accounts, the Wellesley deal is well worth a look – just make sure you know, and you're happy with, the associated risks.
And you'll also have to be prepared to lock £3,000 away for at least three years.
If you're unsure about peer-to-peer lending, many current accounts are now paying higher interest rates than the leading savings accounts – the TSB Classic Plus Account, for instance, pays up to %.00% AER (variable) on balances up to £2,000.
It also offers 5% cashback on your first £100 of contactless payments each month.
You can read more on that account and how you can get £125 cashback in this article How to earn cashback on household bills.
And you can compare a range of current accounts at MoneySuperMarket.