Lucinda Hartley calls herself a serial entrepreneur and her latest gig at a home lending shared equity startup will test that moniker.
Her new job is chief growth officer and late stage co-founder with Mondus Capital to provide mortgage broking and housing loans to people who can afford to service loans but don’t have the deposit.
It comes as the housing crisis deepens. Our Let’s Hack Housing event last week (report coming soon), found endless problems but very few solutions beyond the growing – and urgent – pleas for more social housing. In recent days there’s also been calls for home lending criteria to be relaxed from its post GFC stringency.
Hartley, best known as a co-founder of Neighbourlytics, the tech focused company that could carry out deep dives on neighbourhoods and their characteristics, is now going a step further – or deeper – into the housing that makes up those neighbourhoods.
She says the new company will use tech and AI to understand the liveability of neighbourhoods and their investment profile.
The new company is founded by Nir Davidson a former professional skydiver and Mariano Cicciarelli who has a background in marketing in Argentina and the UK.
Hartley says the idea is to plug the deposit gap and provide 20 per cent of the loan which can be repaid after five years through refinancing. The total loan is 105 per cent of the purchase price to account for a mandatory 2.2 per cent savings and additional cost associated with purchase such as stamp duty and legals.
Borrowers are likely to be people who don’t meet banks’ ideal profile for borrowers, such as traditional couples or people with long term secure employment but can well service a loan.
“In our model you still have to meet the serviceability of the loan and we assume you are borrowing 100 per cent of the cost of the home,” she told The Fifth Estate on Wednesday.
But what happens if things don’t go right? If the housing market falls? Prices are dipping in some places.
Hartley says if the market crashes, everyone is in the same boat.
But if all goes to plan the homeowners get to refinance after five years and pay out the nonbank lender.
Hartley says the company has signed up to all the required licences as a non bank lender and mortgage broker.
The market is huge, she says. “The scale of the problem is that there’s over 500,000 people who would fit the criteria for shared equity and we can only service about 1000 a year.”
“It’s the biggest addressable market I’ve ever considered.”
For now though the company is still in startup mode.
“We have a pool of funds for our initial 10 loans and also commitment for a larger wholesale debt facility for our scale up growth.” With more interest to further develop the scheme, she adds.
Mondus isn’t the only alternative lender in town. The shared equity scheme has been used by various state and federal governments for many years but is currently limited to $90,000 for individuals and $120,000 for couples, Hartley says.