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21st of November 2018

Economy



The innovative Finance ISA: Don't waste your savings with a bank

Millions of savers are leaving cash in the bank earning near zero interest when they could get a higher rate by being a little innovative – all with capital secured against property.

The new Innovative Finance Isa gives investors far better rates by allowing them to lend money and generate tax-free returns.

The British Pearl Isa is offering savers the chance to earn interest income of up to 4.4 per cent a year free of tax by investing in loans secured against UK property.

HIGH INCOME

Peter Wakeham, non-executive director, board chairman and investor with British Pearl, said its Isa is a simple way to tap into the higher rewards available from secured UK property loans.

“A tax-free income of up to 4.4 per cent a year is hugely attractive and comes with plenty of safeguards too.”

This income is paid monthly for up to five years, with no charges deducted, and is far higher than the 0.85 per cent currently paid by the average variable rate cash Isa, but it should be noted that cash Isas are much lower risk as the funds just sit in a bank account whereas with a British Pearl Isa your investment is secured against a physical asset.

You can invest your full £20,000 annual Isa allowance if you wish, and the process takes less than four minutes online. You can even transfer money held in existing Isas, with British Pearl handling the process for you.

SAFEGUARDS

In contrast to a cash Isa, with the British Pearl Isa your money is not covered by the Financial Services Compensation Scheme, but British Pearl is regulated by the Financial Conduct Authority, and your capital is ring-fenced to keep it safe.

Mr Wakeham said for further peace of mind, your capital is secured against the property itself. “You can go onto our site and pick the property you want, so you know exactly which property your cash is secured against.”

So as long as the property you invest in maintains its value your initial investment will be safe.

British Pearl uses its industry contacts and cash buyer status to secure discounts when buying properties – and those discounts are passed on directly to its customers.

It also sets strict limits on its borrowings. “Our typical loan-to-value is low at between 50 and 70 per cent, so house prices would have to fall at least 30 per cent before there was any chance of making a capital loss.”

The British Pearl Isa is flexible allowing you to withdraw your money through their Resale Market.

“So if you needed to withdraw £5,000 for an emergency, you could pay that back in before the end of the tax year without sacrificing your allowance,” Mr Wakeham said.

RISK

Your capital may be at risk if the property value falls. The value of investments can go down as well as up, and you may not get back the full amount invested.

Past performance is not a reliable indicator of future returns. Isa rules apply. Tax treatment depends on individual circumstances and may change in the future.

Before making an investment decision, please seek the advice of an independent financial advisor, as you need to consider whether the investment is appropriate to your objectives, financial situation and needs.

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