Research shows that 85 percent of renters in the UK want to own their own home but are unable to do so due to high deposit requirements and rapidly increasing prices. This is where the UK Government’s Help to Buy scheme provides a solution for those purchasing new-build properties. However, it serves only 10 percent of FHBs and is set to end in April 2023.
London-based fintech company Proportunity aims to help thousands of first-time buyers and ‘second steppers’ on the property ladder with its loans that are similar to Help to Buy. It is available for all homes, not just new builds. Now, the company has raised £105 million through debt and equity funding. The funding round was led by VentureFriends, Kibo Ventures and existing investors Anthemis, Entrepreneur First, as well as UK proptech investors Amro Partners. The new investment came after it raised a £7.3 million funding in 2020.
Eyes to help over 2,000 buyers
The new investment will enable Proportunity to grow its team and will go towards helping more than 2,000 individuals and families to buy their first home or progress up the property ladder. The funding will also increase Proportunity’s maximum loan size from £90,000 up to £150,000 per home, further boosting affordability for buyers and helping them secure the home of their choice.
Proportunity loans enable buyers to afford homes with only a 5 percent deposit, reducing the amount they need in savings. The Proportunity equity loan of up to £150,000 or 25 percent of the house price sits on top of the maximum mortgage that can be secured from a mainstream lender, enabling a buyer to borrow up to six times their income level. This additional financial leverage closes the significant gap between what many UK borrowers can secure from a mortgage and the cost of a home they wish to purchase.
Vadim Toader, Proportunity CEO and co-founder said: “We’re delighted with the success of this latest investment round which will enable us to help thousands of people in the UK own their first home or progress up the property ladder. In the UK there is a £100-200K gap between what buyers want and what they can afford, mainly caused by maximum income/mortgage ratio restrictions and high deposit requirements.”
VentureFriends partner, George Dimopoulos said: “We’ve been investing in proptech startups that improve the real estate journey since 2016. In Proportunity we saw a product that can positively impact the lives of thousands of FHBs. Proportunity founders, Vadim and Stefan, have experienced the pain of trying to get on the housing ladder themselves and we were impressed with their resilience, drive and progress so far.”
Javier Torremocha from Kibo Ventures said: “We were greatly impressed by the vision and execution capabilities of the team led by Vadim and Stefan. Proportunity is in the very attractive intersection between proptech and fintech, and contributes to generating positive impact in people by allowing first-time home buyers access to their dream homes.”
Anthemis Group Partner, Ruth Foxe Blader, said: “Anthemis is thrilled to continue supporting Proportunity in its journey to help first-time buyers get great homes. Despite the challenges of Covid lockdowns and market uncertainties, this outstanding team has continued its growth journey on multiple fronts. We’re excited for the next chapter!”
Equity loans for first home buyers
Proportunity was founded by Stefan Boronea and Vadim Toader. It provides home purchase equity loans to support first home buyers (FHBs) in getting a foothold on the booming UK property market. Also, it helps ‘second steppers’ secure a new home to accommodate changing circumstances, such as a growing family in a market where consumers struggle with affordability amid rising property prices.
Proportunity also utilises machine learning technology that helps identify fair valued homes in high potential growth areas, de-risking lending and removing the need for a large deposit. Properties that have been selected via this innovative technology have registered returns that are 50 percent better per year than the UK house price index (HPI).