Co-founder and chief operating officer Colin Bell (pictured) said brokers would receive commission when they complete a mortgage and receive payments at different intervals over the lifespan of the mortgage “as long as they maintain contact with the customer and [carry out] reviews”.
He suggested these broker reviews would include client check-ins, allowing people to switch onto a new rate as well as port their mortgage to their next home or transfer it to the new owners of a property.
“We’re trying to get the community to think of it as a long-term product and a long-term relationship. So you don’t need to be selling a new mortgage every two years to be paid.
“We will pay people for the work they do throughout the life of the mortgage,” Bell said.
Perenna is funded by covered bonds and not short-term savings or deposits. This means each mortgage will be financed for the lifetime of the fixed term.
Bell said this enabled the lender to consider a five-year early repayment charge for its 30-year fixes. This means borrowers can re-evaluate the terms of their mortgage during a broker review without costly fees or long wait times.
“We want people to have flexibility,” he added.
A covered bond is a portfolio of loans issued by a bank then sold to a financial institution for resale.
With a covered bond investment, the underlying loan remains on the book of the lender that issued them. The interest paid is covered by cash generated from the loans and returns on defaulted mortgages can be subsidised by other existing loans. The risk to investors is considered to be relatively low.
If the lender goes out of business, investors can still receive interest payments from underlying assets.
Perenna aims to offer shorter fixed rate mortgage terms alongside its long-term range but will launch with the latter first. As Perenna awaits its banking license, Bell said the details of its proposition were not yet finalised.
The launch is expected next year.