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Zopa meets lender Alan from Yorkshire

Some savvy property investments and a generous merchant navy pension will help provide Alan Brusby with a comfortable retirement when he stops work in three or four years’ time.

Getting started with peer-to-peer lending

But Alan, 55, has also built up a substantial holding in Zopa loans since he joined the site in 2013. “Two or three years ago, a friend told me about peer-to-peer lending so I did some research,” says Alan.

“Zopa was a name that kept coming up as they were the first company to offer P2P lending – and from the reviews I read online, it sounded like a good idea.”

Alan initially started by lending relatively small sums. “But after a year or so I got more comfortable with it and started gradually increasing the amount I lent – I’ve got about £52,000 lent out at the moment.”

Understanding the risk

While Alan, from Beverley in East Yorkshire, understands that there is more risk attached to P2P lending than putting money in a savings account, he has not been badly affected by bad debt. “I have made hundreds of loans, and there are maybe three or four people who haven’t paid me back,” he says.

Zopa makes a lot of financial sense because the returns on bank deposit accounts have been so low since the credit crunch, Alan adds. “Most accounts are just paying 1% or 1.5%, which is incredibly low.”

Bypassing the banks

The fact that P2P lending bypasses the banks is another attraction for Alan.

He is critical of the difference between the banks’ typical borrowing and saving rates: “They are charging borrowers 5% or 6% on loans but then savers get just a fraction of that,” he says. “I like that with Zopa, the rates paid to lenders and charged to borrowers are much more closely aligned.”

Bricks and mortar

Much of Alan’s wealth is tied up in bricks and mortar – he has three buy-to-let properties in the UK as well as a holiday home in Davenport, Florida. “My wife and I used to put money into the stock market, but we didn’t like the fluctuations. We’re getting close to retirement so we aren’t comfortable with prices going up and down – we just want our money to produce a steady income.”

Alan has recently taken advantage of Zopa’s “early access” feature – which charges a 1% fee – to withdraw money needed to pay off a mortgage on one of his properties.

“We had an endowment but, like so many of them, it wasn’t enough to cover the loan and we had a shortfall of about £10,000. So we used the early access service to get the money we needed.”