An investment with Money Mog is not the same as putting your money in a savings account. An investment in peer to peer loans, even when secured against land and property, contains risks.
Capital and interest risk
The market value of property can go down as well as up and the return of your capital may be dependent upon the Borrowers being able to sell the properties. This can never be guaranteed.
Repayment of loans is not a certainty, and from time to time borrowers may default. The House Crowd tries to mitigate this risk by having a full due diligence process to assess the project and the borrower before listing the investment on the platform. Unexpected things can happen and the due diligence process does not completely remove the risk inherent in lending. You may not receive all your capital back and the process to repossess and sell a property could alter the time your money is tied in.
Any loans made secured against property should only be considered as part of a diverse investment portfolio which contains investments of different kinds and where you do not put too great a proportion of your capital into one particular type of investment.
Your money is lent to property development companies and other businesses where the loan can be secured against the value of the property. House Crowd Finance Ltd acts as trustee on behalf of all investors.
While the development companies are all separate legal entities some of these companies share the same directors and/or individuals as The House Crowd Ltd (which operates your Money Mog account) who have significant control of their activities. While this structure creates a strong element of oversight and due diligence (as there is not a reliance upon unconnected third parties) your investment may not benefit from the same diversity as might apply if it was lent solely to several unconnected third parties.
Innovative Finance ISA-specific risks
Tax-free entitlement of an ISA depends on your circumstances and may be subject to future change. Any withdrawals or capital losses count towards your annual tax-free limit and cannot be replaced in that tax year. If The House Crowd became insolvent your IF ISA may lose its tax-free status.
Liquidity (ability to withdraw)
If you invest in individual P2P loans your investment is illiquid. This means that there is no ability to transfer the benefit to a third party. Once the loan is made, you are committed to it for the period of the loan.
Investing in a discretionary P2P model like Money Mog (where we choose the loans) means that, in normal market conditions, there should be increased liquidity because you would not have to wait for the full period of the loans to elapse when making a withdrawal request. This is because we should be able to transfer the outstanding loans to replacement P2P lenders who invest via The House
However, this is not guaranteed. If there are insufficient further P2P monies received from further investors due to changes in market conditions you will need to wait for the full term of each loan to elapse, which may be significantly later than your preferred withdrawal date.
You will also not be able to withdraw any part of your money that has been allocated to a loan that is currently in default until that loan has been repaid.
Financial Services Compensation Scheme
There is no ability to make a claim under the Financial Services Compensation Scheme (FSCS) should the investment fail for any reason or should The House Crowd become insolvent. There may be instances where uninvested money, when held in a segregated bank account, is protected by the FSCS up to £85,000. However, as the intention is for your money to be invested in loans for the majority of the time you should assume that FSCS protection generally does not apply.