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Equity loan lender Even eyes distribution and lender partnerships

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  • 04/03/2022
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Equity loan lender Even eyes distribution and lender partnerships
Equity loan provider Even is targeting mortgage clubs and networks as well as more lender partnerships as it looks to gain market traction.

 

The lender officially started lending in late February and works in a similar way to the Help to Buy scheme but is focused on pre-existing rather than new-build property. It offers interest-free equity loans of up to double the value of a first-time buyer’s deposit, up to a maximum of £100,000.

Speaking to Mortgage Solutions, co-founder of Even Ben Bailey (pictured) said currently there were 4,000 people on its waiting list and the majority were from London and the South East.

Bailey said: “Londoners in particular are in this really difficult rent trap position where they are paying so much in rent, so saving a significant amount of money is really tough, and that’s where Even can help.

“I predict that we’re going to have quite a positive impact on the London market.”

He said the typical borrower type was professional couples who were renting as they tended to have a higher household income but struggled to raise a deposit, but Bailey said Even would also work well with those on lower salaries.

Bailey said: “When a single person wants to try and find a home in London, it’s increasingly out of reach. We can help to top up people who are on a lower salary and restricted by income multiples. Because the loan is interest free, it doesn’t affect affordability as much as an equity loan with interest.”

He reiterated that £20,000 was the “average loan across the country”, but he said he anticipated it to be closer to £40,000 in London.

 

Broker relationships

Bailey said he did not expect the “strong influx of broker enquiries” it had received since launch, and broker feedback had been very positive, with some saying they had clients they had not been able to help before it now could.

Bailey noted it was growing all the time and added that it had had 10 to 15 enquiries from broker firms over the past few days alone.

“It’s so satisfying to see that demand,” he said.

He added that it had around 1,000 individual brokers registered but said there was still a “long way to go”.

He said direct approaches from customers and from brokers tended to be quite evenly split but there was a difference in how far down the line the client tends to be, as the “likelihood of someone being ready to go is much higher from a broker”.

He explained: “Those that get in touch directly are on a varied timeline, so some of them might be ready to buy, others [are] two years away. It’s our job in the meantime to make sure that we help to educate them on what’s best for their situation.”

Bailey said it had spoken to a lot of brokers, clubs and networks, adding that it was in “advanced talks” with some of the large clubs and signed a couple of partnerships already.

He said: “There definitely seems to be an appetite for distributing our products, and brokers are super warm to it, and we’ll continue to operate training sessions and whatever else it takes to make brokers excited to work with us.”

He added that it had partnered with Tembo, a family lending and first-time buyer specialist mortgage broker which offers an income boost and deposit boost product to improve first-time buyer’s affordability.

Bailey explained: “At the end of the day, we’re here to help first-time buyers on the market, so we want to be making the best recommendation for the customer. Even might be the best solution for one person, but we’d love to be able to recommend a different solution if Even isn’t right for them.”

He added that it would be looking to onboard more brokers to its platform whether that was through PR, networking or talking at conference. He continued that as Kensington, who it recently partnered with had a lot of relationships with brokers and it would be “working closely with them”.

 

Lender partnerships

Even recently launched with Kensington Mortgages, the first lender to partner with the firm, but Bailey said further lender partnerships were in the pipeline.

He said Even was talking with high street banks and building societies, and was in “advanced talks” with a “handful of the biggest lenders”. He said he expected them to be “coming on board in a short space of time”.

Bailey explained: “People want choice, they want a choice of interest rates. Kensington is fantastic particularly for people who are in unique situations, for example self-employed people. But there will be people that attract a high street loan rate, so we also want to cater to that.”

He also said lenders were “looking at their policies” and the role private solutions could play as Help to Buy is due to expire in 2023.

Bailey continued: “Lenders see a need for Even. They are all drawn to our Treat Customer Fairly (TCF) features, because we have thought about and mitigated the potential pitfalls for customers. Sharing the loss in value, not taking renovation appreciation, having profit caps. It’s those things that make Even appealing to lenders.”

He added that he would “definitely anticipate” people who would have used Help to Buy will turn to Even instead. He said that raised the question of whether it would lend on new-builds in the future.

Bailey said: “We’re starting with pre-owned homes, that’s our initial proposition and what many first-time buyers want. But if there continues to be demand for new-builds then we will consider it.”

 

Key product features

Bailey added that there were key product features which would appeal to a lot of borrowers, including its profit caps, attitude to renovation and profit split.

Bailey said as you got further out of London then properties were more “unique” and there was a growing trend for people to renovate their homes.

He said that the product was “designed with renovators in mind” as the value-added by the renovation was kept by the owner when the property was sold.

Even’s profit split, where profit for the sale is split equally between the borrower and the lender, is structured so if house price goes down then Even shares the loss.

“We just think it is the fair thing to do,” Bailey said.

He added that it had profit caps on its share, so if someone decided to sell the property in 10 years which he said was the case for first-time buyers, then it capped its profit at twice of what it lent.

“So, if house prices go ballistic, our profit doesn’t change, we have our cap and the owner takes the rest,” Bailey explained.

He concluded: “We’re on a mission to end Generation Rent. This product certainly solves that for a lot of people, but there’s a whole bunch of solutions that would work for different situations so we will continue to look at bringing new products to market.”

 

 

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