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easyMoney ISA Review

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In this easyMoney Innovative Finance ISA review, we look at what this type of ISA has to offer to investors. We also examine easyMoney in more detail, to help you decide whether they are the right IFISA provider for you.

The first thing you likely noticed when you came across the easyMoney ISA* is that the branding looks strangely familiar. The easyMoney ISA is brought to you from the ‘easy’ family of brands. These include well-known names like easyJet, easyHotel and easyCoffee.

Now that we’ve establised who easyMoney are, let’s look a little more closely at what they have to offer.

How Do Innovative Finance ISAs Work?

Innovative Finance ISAs were introduced by the government in 2016. They allow investors to participate in peer to peer lending with the added benefit of tax-free returns.

With this kind of ISA, you invest your cash with your chosen provider and they lend it out to others. The return on your investment comes from the interest paid on these loans.

As Innovative Finance ISAs are Investment ISAs and not Cash ISAs, the capital you invest is at risk. Many Innovative Finance ISA providers do try to reduce this risk in certain ways.

We’ll discuss how easyMoney do this now while explaining how the company invest your money to get the projected returns.

How Do easyMoney Invest Your Cash?

It’s important to know that different Innovative Finance ISA providers specialise in lending to different types of borrower.

easyMoney* specialise in lending to carefully selected property professionals. These professionals are usually looking for short term finance of between 3 and 12 months to fund property purchases. To reduce the risk to easyMoney investors, easyMoney take security over each property they lend on.

In contrast, another IFISA provider called RateSetter* – who we recently reviewed on the blog – specialise in lending to individuals instead.

Who Can Invest With easyMoney?

You can invest in an Innovative Finance ISA alongside a Cash ISA or Stocks and Shares ISA, just as long as you only invest a maximum of £20,000 in the current tax year across all the ISAs that you own.

To open an easyMoney ISA* you’ll need to invest a minimum of £1000 if you are investing in the ‘conservative’ product or £10,000 if you opt for the ‘balanced’ product. You’ll also need to be sure that you haven’t already paid into another IFISA in this current tax year.

As this is an ISA product, you will need to be a UK resident and you will be asked to provide your National Insurance number when you register.

What Returns Do easyMoney Offer?

The interest rate you receive on your easyMoney ISA depends on whether you opt for the conservative or balanced product.

At the time of writing, the conservative product offers a projected interest rate of 4.05% per annum. The balanced product offers a higher rate at 7.28%. While we do our best to keep rates up to date, it would be wise to check the latest rates here* in case they have changed recently.

The interest rate is higher on the balanced product because loans are made up to 75% of a property’s value. With the conservative product, it’s only up to 65%. This means that less risk is taken on the conservative product.

Then there’s also the fact that there’s a £10,000 minimum investment with the balanced product. While with the conservative product the minimum investment is only £1000.

It’s worth mentioning that these are projected rates, so they may differ slightly to the headline rate. This will depend on whether your capital is invested 100% of the time or whether there are gaps in lending.

How Long Will Your Money Be Tied up For?

How long your money will be tied up for will depend on the length of the loan you’re invested into. If you want to withdraw early then it may be possible to request your loans be sold to another investor.

What Other Benefits Are There?

An added benefit of becoming an easyMoney investor is that you’ll get an easyMoney plus card* when you join the easyMoney family. The easyMoney plus card is a discount card that you can use at 100s of high street retailers and attractions.

Is Your Cash Safe With easyMoney?

Now we come to that all important question, is your cash safe with easyMoney?

As this is an investment ISA, your capital could be at risk. While easyMoney are regulated by the Financial Conduct Authority, there is no FSCS protection on Innovative Finance ISAs.

Really then, the security of your capital will depend on a couple of factors.

The first factor is how easyMoney select their potential borrowers. To understand more about how this works and what would happen in the event of missed payments on a loan, we would encourage you to read the ‘understanding the risks’ page on the easyMoney Website*.

The second factor that might affect the security of your capital will be the performance of the property market. If a property you are invested in suffers a loss in value, then this might affect your return.

Is the easyMoney ISA for You?

We hope that this easyMoney ISA review has given you a better understanding of how this type of ISA works.

Whether the easyMoney ISA* is for you or not will depend much on your own perception of risk vs reward. You will also need to consider the amount you have to invest and how long you want to invest for.

Finally you will need to look at your other ISA investment arrangements to ensure eligibility to invest.

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