Octopus Choice Closes Lending Platform Because of Lack of Liquidity Through Pandemic – Octopus Investments Choice Review + ISA
My Lending Experiences & Actual Investment Returns Published Monthly Below.
What (was) Octopus Choice?
Octopus Choice (by Octopus Investments) was a UK Peer to Peer lender providing Real Estate property loans sourced through Octopus Real Estate, part of the larger Octopus Group which employs over 800 people and is a profitable company which has been in business for almost 20 years.
My Experience with Octopus Investments. Choice
Octopus Choice were fine before the pandemic and I had significant capital with them. Unfortunatley they had to close the platform because of the pandemic and they are no longer open for business. As far as I know, all investors capital is being returned and I retrieved every penny of my capital & interest so good look to the staff from Octopus Choice for the future & RIP. Another company killed by the COVID pandemic.
The Obvious Investor – Easy-Info Table© – Octopus Choice Review
Overall Rating*: (4 / 5)
Who can invest: Loan Currencies: £
Estimated Return: 4.00%
My Annual Return
My Calculated XIRR: N/A (not enough data)
My Current Investment:(click to see amount in £) See My Investment £
Risk Rating*: 2/10 - Low
Early Exit: Yes. Under normal market conditions.
Min. Investment: £10
Deposit Funds: By bank transfer or debit card.
Debit card is instant.
Bank transfer usually takes 24 - 48
hours for BACS bank transfer.
Can be same day for Faster payments.
Auto-Invest: Yes (only option)
Manual Invest: No
Lending To: Borrowers (via originator)
Loan Security: Yes: on development property with LTV's typically below 70%.
Default Rates: 0.70
Provision Fund: No, however 5% lender skin in the game for capital protection.
Loans Amortize: Yes, most.
Time to Invest: Long, currently 2-4 weeks.
No interest paid until funds are distributed.
Time to Mange: Almost None (Auto-Invest + Auto Reinvestment of Interest).
Lender Fees: No
Payments Received: Payments are received monthly.
Amount Lent: £400m +
Number of Investors: 8000+
Loan/Dflt Stats: Available Here.
Regulated: Yes: FCA
Location: HQ - London, UK.
Launched: Est 2016
Telephone: 0800 294 68 48 (UK)
IFISA/IRA: Yes: IFISA
Cashback**: None Currently.
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Octopus Choice Review – Overview
Octopus Investments Choice were established as a Peer to Peer platform in 2016. Although they have only a few years under their belt, The Octopus Group which Octopus Choice is part of were founded in 2000 so there is a wealth of history and knowledge they can pull from. This is demonstrated in the fact that Octopus Choice are a profitable company with a little over £2m profit in 2019.
Octopus Choice have the benefit of sourcing their loans through Octopus Real Estate who are also part of the Octopus Group who were established in 2009 and have originated over £4 billion in Real Estate loans to date. Originating loans through this sister company keeps loan marketing and acquisition costs to a minimum therefore increasing profit for Octopus Choice.
In the time they have been established, Octopus Choice themselves have facilitated almost £400 million in loans, most of which are to experienced buy-to-let landlords around the UK all secured by property at very reasonable LTV’s.
I like the feel of Octopus Choice with the backing of a large, profitable company with a 20 year history. So do many others as is evidenced by the length of time it takes to get capital invested into loans once deposited (currently running from 2 – 4 weeks).
Regulation – Octopus Investments Choice Review
Octopus Choice (registered name Octopus Co-Lend Ltd) is a Peer to Peer lender regulated by the UK’s Financial Conduct Authority (FCA) with full permissions under FCA number 722801
Octopus Choice gained FCA permissions in December, 2016, one of the first Peer to Peer lenders to obtain FCA permissions.
It’s important to note that the FCA is not the same as the FSCS (Financial Services Compensation Scheme), so capital is not protected as it would be in a bank.
Signup Process – Octopus Investments Choice Review
Opening an account with Octopus Choice is super-easy. Just the usual ID & anti money-laundering checks.
If they can verify you though one of the UK’s credit agencies, you will be approved immediately. You’ll then just need to upload ID and address verification in the form of a UK passport, driving license and bank statement (or similar document).
Only residents of the UK, with a UK bank account can signup with Octopus Choice.
Deposits & Withdrawals
Deposits are made by bank transfer from a UK bank or from a UK debit card.
Your deposits by debit card will be available instantly. Bank transfers will usually show up in your account the same or next working day.
Withdrawals are only to a verified bank account and typically take 1 – 3- business days.
Time to Become Invested
Funds can take quite a while to get invested into loans, and there is no interest paid until the funds are dispersed. Currently it’s taking around 21 days to become invested.
Who are we lending to?
Octopus Investments Choice is a true Peer to Peer Platform. Lenders are lending directly to borrowers (through the more established originator Octopus Real Estate).
Borrowers are typically experienced buy-to-let landlords using the property as rental assets for their businesses.
Octopus Choice acts as the middle man, managing loans, collecting payments and dealing with debt collection etc.
Octopus Choice loans on property assets with LTV’s (Loan to Values) that average around 60%. The maximum is 76%. This means the secured property would need to lose up to 40% of it’s value before an investor would lose money. More than half of their value with many of the current loans which have LTV’s under 50%.
Octopus Choice also holds the senior position (also called “first charge”) on all properties which it lends on. So in the event of a default, Octopus Choice gets paid first before other lenders who have 2nd (and higher) charges on the property.
Default Rates – Octopus Choice Review
As you would expect, they have a very low default rate. As of the end of 2019, their default rate is around 0.7%. Default does not mean loss though, as Octopus Choice can still sell the assets to recover investors capital.
Most Octopus Choice loans amortize as they are typically mortgages on rental properties. There are a few short term property development & bridging loans which historically pay interest only or pay a bullet payment at the end of the loan term.
Selling Loans and Withdrawing Capital – Octopus Choice Review
Access to your money is as fast as loans can be sold to other investors. Of course this depends on other investors funds being available for market liquidity. This has been no problem at all so far as there are way more funds wanting to get in than investors wanting to get out. There is no fee for withdrawing capital.
Withdrawing is as simple as entering which account to withdraw from, how much to withdraw. Then enter your date of birth as an extra security check.
Diversifying loans is something Octopus Investments Choice does automatically. Because of the way their platform works, diversification is all done in the background.
You can still list the loans you are invested in, but it doesn’t really make any difference as you don’t have a choice in which loans the auto-invest system gets you into as risk is spread over most or all of the loans in the system.
Provision Fund – Octopus Choice Review
There is no provison fund as such, but they do invests 5% of their own money into each loan. This is generally known as (“skin in the game”), there’s lower risk to you if a borrower defaults as Octopus Choice will take the first 5% of any loss (after the property has been sold, if all capital is not recouped in the sale).
Tax Free Innovative Finance ISA (IFISA) – Octopus Investments Choice ISA
Octopus Choice offers an Innovative Finance ISA (Octopus Choice ISA) offering the same 4% target rate as their standard account.
The Octopus Choice ISA is for UK residents only.
Octopus Choice Accounts
Octopus Choice has just one standard (they call it their “General”) investment account, and the ISA outlined above.
Both accounts are auto-invest only. All funds are invested and reinvested for your automatically. This makes the time required to manage investments virtually zero after initial account setup and funds deposited.
Website – Octopus Choice Review
The Octopus Choice website has to be one of the easiest to navigate and understand. You just choose your account, transfer money into it and your done. Funds are then queued for investment and they get distributed into loans as they become available.
Really couldn’t be simpler. The learning curve here is about 30 seconds.
Reinvesting your capital is done with a simple switch from the accounts menu. If the switch is on, capital and interest gets reinvested into any available loans as soon as possible. Switch is off, capital and interest will be available in cash for withdrawal at any time.
Summary – Octopus Investments Choice Review
I feel Octopus Choice has one of the safer Peer to Peer lender offerings in the UK as far as their actual property secured loans go. Along with the fact that they are profitable, with the backing of the larger Octopus Group makes them about as safe as you can get in the Peer to Peer lending market.
This of course is reflected by lower return rates on investments which have kept me from investing with Octopus Choice until now. Recently since the rates of other lenders such as RateSetter & Lending Works have been reduced, and Landbay has stopped accepting retail investors. Suddenly Octopus Choice have become a viable alternative for better diversification.
If you need somewhere relatively safe to invest money for diversification purposes, but still get an average (although lower) rate. Take a look at Octopus Choice.
Thumbs Up Points for Octopus Choice
Safety – Octopus Choice appear to be one of the safer Peer to Peer lenders because of the loan security they offer – low LTV’s and senior positions on all loans. Also having backing by the larger Octopus Group makes them an even safer proposition.
Auto-Invest –very easy to invest, and hands off investing once set up.
Website – very easy to use and understand
Diversification – funds automatically diversified between loans
No cost exit – ability to withdraw funds early at no cost under normal market conditions.
Financial Conduct Authority – (FCA) Regulated.
Innovative Finance ISA (IFISA) available – Octopus Choice ISA for potential tax free investing for UK investors
Thumbs Down Points for Octopus Choice
Lower Returns – lower risk investments generally mean lower returns. The 4% target rate they are offering is inline with other, safer & larger lenders currently.
No provision Fund – 5% skin-in-the-game, but no provision fund as such, so if loans default, you may have to wait a while with no payments before assets are sold to regain capital.
Risk Factor – 2/10 – Low
So, is Octopus Choice safe? I consider them to be in the lower end of the risk scale.
Octopus Choice have very well vetted, well secured, loans. They are profitable and part of a larger group of companies making them one of the safest Peer to Peer lenders in the business.
Who Can Invest with Octopus Choice?
U.K. resident investors with a U.K. bank account and a U.K. address and phone number who can pass the ID checks can invest. Contact Octopus Choice for further information.
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Disclaimers: This page is presented for informational purposes only. I am not a Financial Adviser and therefore not qualified to give financial advice. Please do your own research and make your own investment decisions. Do not make investment decisions based solely on the information presented on this website. * My opinions, reviews, star ratings and risk ratings are based on my personal investing experience with the company being reviewed. These ratings are personal opinions and are subjective. ** Some of the links on this website are affiliate referral links. When you click on these links, I can sometimes receive a commission, at absolutely no cost to you. This helps me to continue to offer new reviews & monthly portfolio updates here on my website. I don’t receive commissions from all platforms and it has no effect on my ongoing opinions on investments & investment platforms. Income from my investments and capital preservation are my main motivations. Platforms reviewed on this website I am currently investing with, or I have invested with in the past. You can see with full transparency on my Portfolio Returns page which assets & platforms I am invested with (or have previously been invested with) at any point in time. I am not paid a fee by any of the companies to write reviews, so the reviews are unbiased and purely based on my own personal experiences. Please read my full website Disclaimer before making investment decisions.
This page is presented for informational purposes only. I am not a Financial Adviser and therefore not qualified to give financial advice. Please do your own research and make your own investment decisions. Do not make investment decisions based solely on the information presented on this website.
* My opinions, reviews, star ratings and risk ratings are based on my personal investing experience with the company being reviewed. These ratings are personal opinions and are subjective.
** Some of the links on this website are affiliate referral links. When you click on these links, I can sometimes receive a commission, at absolutely no cost to you. This helps me to continue to offer new reviews & monthly portfolio updates here on my website. I don’t receive commissions from all platforms and it has no effect on my ongoing opinions on investments & investment platforms. Income from my investments and capital preservation are my main motivations.
Platforms reviewed on this website I am currently investing with, or I have invested with in the past. You can see with full transparency on my Portfolio Returns page which assets & platforms I am invested with (or have previously been invested with) at any point in time. I am not paid a fee by any of the companies to write reviews, so the reviews are unbiased and purely based on my own personal experiences.
Please read my full website Disclaimer before making investment decisions.