Tony Hetherington finance column

Sep 8 2010 by Linzi Nicholson, Huddersfield Daily Examiner

Have you heard of ‘peer to peer lending’? It was mentioned on a radio programme and pays above average interest, but I have seen nothing advertised. K W

Peer to peer lending is just a posh way of describing a scheme that puts individual lenders and borrowers in touch, cutting out the banks and building societies. Some people call it ‘social lending’.

If you are a lender, you contact a firm that acts as a middleman and choose a borrower from one on the firm’s books. Borrowers are graded, depending on how risky they look. A loan to a pretty safe borrower should earn you between 6 and 9 percent interest. Or you can take a chance on a borrower with a poor credit rating and earn three times as much, or more. And of course the middlemen take a small percentage.

For borrowers, the advantage is that interest rates are far lower than those charged by banks.

If you fancy investing, do spread your money around several deals, just in case one borrower fails to make repayments. And remember, because you are making a private loan and not using a bank, you cannot complain to the Ombudsman if something goes wrong, and there is no compensation scheme either.

Middlemen who operate social lending schemes include www.yes-secure.com, www.zopa.com, and www.fundingcircle.com.

I took out a funeral plan bond years ago through a sideline run by the Co-op. What has happened to it now? F M

The photocopy bond you sent me shows it was issued in 1995 by the Ipswich & Norwich Co-operative Funeral Service. Basically, you have pre-paid for your own funeral at 1995 prices.

The Ipswich & Norwich now comes under the wider East of England Co-operative Society, based at Wherstead Park, The Street, Wherstead, Ipswich, Suffolk IP9 2BJ (01473 786000).

I have checked with the society and I am happy to say that your bond is still perfectly valid and your money is safe.

Am I allowed to sign my house over to my two children while my husband is alive, or must I wait until after his death? He is in a nursing home, suffering from Alzheimers, but I have power of attorney. Mrs S B

I have not seen the wording of the power of attorney but the likelihood is that it does give you complete control over your husband’s assets, including any stake he has in your home.

You should see a solicitor before transferring ownership though, just in case there is any suggestion that a disposal of his assets is against your husband’s interests or would sidestep his creditors, if he has any.

I am 55 and would like a mortgage that runs until I am 70. Is this allowed? D R B

Yes, it is allowed, but you may not be offered as good a deal as someone younger whose home loan would be paid off before they reach 65.

It would be worth consulting a local mortgage broker who can shop around for the best terms. And do not delay for too long. Mortgage rules are likely to be tightened for everyone within the next year.