The People’s Mortgage represents “the only real solution,” to mortgage prisoners’ woes, says Birkett (pictured), who’s been working to find ways to release the prisoners during the past year.
The product will be offered by JustUs, which is a trading style of Birkett’s latest venture eMoneyHub, a P2P technology platform.
The eMoneyHub platform fuels JustUs, a UK and European Union (EU) debt platform, as well as global P2P crypto platform, Moneybrain.com.
“The People’s Mortgage has been designed to accommodate mortgage prisoners and others excluded from mainstream mortgages,” Birkett says.
“We are the only real solution, and with the cladding scandal and people on furlough, the excluded mortgage market now counts two to four million people,” he says.
Product details ‘TBA’
Birkett’s latest venture is currently stepping through the process of gaining Financial Conduct Authority (FCA) regulatory approvals to offer the crowd-funded homeowner mortgages.
The JustUs crowdfunding platform already serves personal loans, bridging loans and buy-to-let mortgages.
The People’s Mortgage will be a five-year fixed rate product at 2.5 per cent. According to Birkett’s current estimate of the time needed to gain approvals, the product launch is pencilled in for Q4 2021.
“The product is designed to accommodate the millions of people excluded from the mainstream market – mortgage prisoners, and groups like the self-employed, retirees and people with historical credit problems,” Birkett said.
There will be no redemption penalties, a one-page mortgage switch process, and “commonsense underwriting,” he said. Product details, like the term of the mortgage, loan to values, maximum and minimum loan sizes, and product fees, are “to be advised.”
“We will take a commonsense approach. If the person is up-to-date and has made mortgage payments for the last twelve months – say £1,000 a month at 4.75 per cent, affording £600 at 2.5 per cent. . . We will take full advantage of the straight switch affordability rules now in place from the FCA.”
Last year, JustUs sought an exemption from full homeowner residential mortgage lender regulation for the People’s Mortgage. “They could quite easily, with the stroke of a pen, make P2P mortgages exempt. They haven’t got their head around the fact we’re not a lender — it’s a crowd-funded mortgage,” Birkett said.
But the FCA and Treasury refused.
“We’ll have to incur additional compliance and cost, which we were wanting to avoid,” Birkett added.
Many in the industry will be familiar with Birkett’s backstory. He established Prestbury in 1993 selling mortgages and personal loans in the North West, after a motorcycle accident left him unable to continue in his job at the time.
His rollercoaster career saw him rise to chief executive of AIM-listed Prestbury Financial at the age of 31, only to lose it all five years later when the company went into liquidation in 2008.
The online broker network was the UK’s third-biggest network at the time.
About 140 Prestbury advisers were transferred to Personal Touch Financial Services (PTFS) in a sale of the business. The PLC shell company was wound up in December 2008.
Making a comeback
Now Birkett is making a comeback with a mixture of backers including the crowd, venture capital and a government grant. eMoneyHub raised £1.2m this year, with £600k from Manchester Venture Partners, with the same sum matched by the government’s Future Fund.
The deal was then offered to investors on Crowdcube, bringing the total raised to £1.3m. “We are also, within the next month or so, doing a follow on equity round,” Birkett adds.
He says crowdfunded lending has the potential to disrupt the mortgage market, including unlocking the growing numbers excluded from conventional mortgage products.
He said: “There’s a desperate need from people excluded from mortgages.
“The mortgages would not be restricted to mortgage prisoners, but the biggest demand and need today is the mortgage prisoners, because they have been paying sometimes double what they should be for the past 10 years.”
“We’re the digital equivalent of a building society, taking money in savings deposits and lending it to borrowers. We can take money at scale from the people.”
“Since Covid, mortgage prisoners are into their millions,” Birkett said.