Proportunity raises £7.5M fund to make home ownership possible during mortgage clampdown
Proportunity, the startup giving first-time buyers a leg up the property ladder, confirms a debt capital injection of up to £7.5 million to manage record demand following Britain’s post-lockdown housing boom. The new facility allows it to help more first-time buyers, fuelling Proportunity’s recent growth – a doubling of its last 2-years’ portfolio in just the past 2 months. As the only 5% deposit lender (aside from Help to Buy), the company is looking to accelerate growth even further. It hired Marita Cavalcanti (ex-OakNorth, Ebury and Nomura) as its CFO, launched a new intermediaries platform and joined Tech Nation’s latest Fintech cohort.
Closing a bank debt deal during a pandemic is no small feat – it’s likely a premiere for the UK startup scene. The lion’s share of the new debt funding came from Conister Bank.
Douglas Grant, Director of Conister, commented:
"Conister aims to support aspirational and high-impact businesses in a time where other players have retrenched and borrowers need liquidity the most. The UK’s SMEs have shown an incredible amount of adaptability and resilience in the face of changing consumer behaviour as a result of the COVID-19 pandemic, and we are pleased to be able to support Proportunity as it seeks to positively contribute to the dynamics of the UK housing market following the lockdown and to help its customers realise the dream of owning their home."
Proportunity provides home buyers with a deposit boosting equity loan of up to £90,000, enabling them to afford the home they love with only a 5% cash deposit.
A timely product in a housing market currently witnessing its biggest first-time buyers demand in a long time – as they want to own their home given the new work from home environment and take advantage of the new stamp duty relief – but where COVID-19 has made getting a mortgage considerably more difficult for them.
With mortgage lenders pulling back low deposit products (the minimum deposit has increased from 5% to 15% for most lenders), Proportunity’s home equity loan has become one of the few remaining options available to aspiring homeowners.
As a result, demand for the deposit boosting Proportunity Loan has gone through the roof, especially from buyers aiming to own existing properties ineligible for the government’s Help to Buy scheme.
Vadim Toader, CEO and co-founder of Proportunity commented on recent market dynamics:
“When the pandemic hit, we were able to leverage our property market technology to quickly adapt lending decisions, increasing our portfolio’s resilience and continuing to issue loans, where others lenders were forced to pull back mortgage products or put lending on hold entirely. That’s made us the only 5% LTV lender in the UK. Our number of loans has since grown exponentially, and we’re expecting to double our lending book every quarter for the next 6 months. I want to personally thank Conister and their team, including Kai, for believing in us. Without them, this would not be possible.”
Alongside 2 of the top 5 UK mortgage lenders, Proportunity has helped finance over £22M worth of properties since it started lending in 2018. To help as many of the aspiring homebuyers seeking a Proportunity Loan as it can, the digital mortgage lender had to implement a waitlist and a £90K cap on newly issued home equity loans. But unlike mortgage lending from many high-street banks, cash is flowing smoothly into borrowers’ pockets.
The business’s outlook will undoubtedly remain capital intensive, so Proportunity’s is also announcing Marita Cavalcanti as their latest hire, coming on board as CFO from OakNorth Bank. She will be in charge of expanding their debt capital by drawing in more institutional money towards Proportunity’s lending fund.
A good chunk of Proportunity’s growing new business is coming from mortgage brokers sourcing solutions for buyers left out-of-pocket by the market, having onboarded over 200 new intermediaries during the previous quarter. As such, the lender has launched a new intermediaries platform.
Stefan Boronea, CTO & co-founder of Proportunity: "Our partners are at the heart of our success. This year we spent significant time listening to your feedback, fully digitalising and automating the Proportunity Loan application process. This will help us better serve our existing intermediaries by underwriting new loans at a much faster pace. It will also enable us to onboard new partners quicker. In 2020 we’ve faced unprecedented platform usage – automating the entire process was essential to streamline growing demand in the new year."
Proportunity was also recently selected to join Tech Nation's Fintech 3.0 cohort, a growth programme that supports the UK’s rising star fintechs, known for spinning-off finance challengers now turned household names, such as Monzo and Revolut.