Proportunity, a startup based out of London, aims to help first home buyers with loans based on the forecast future price of their house.
The company, started by entrepreneurs Vadim Toader and Stefan Boronea, uses machine learning to accurately forecast property growth, and will soon begin to offer equity loans allowing FHBs to increase their deposit.
The UK already has a government scheme, the Help To Buy scheme, for new build property. Where Proportunity differs is they have fewer restrictions on the type of property, and they don’t charge monthly interest on the loan from the get-go (unlike the government scheme).
FHBs looking to use the Proportunity service require a five per cent deposit for the property, and the service meets this with a 15 per cent loan of the property’s price. This, in turn, allows the buyer to secure a lower interest rate.
Proportunity requires the buyer to repay the loan at 15 per cent of the current market price in five years. In the instance that the price has gone up, the amount paid back will be more than was loaned originally. This is the same as the Help To Buy government scheme.
Because buyers don’t have to pay interest until the loan is paid back after five years, Proportunity says their service will prove to be cheaper than the monthly repayments on a loan taken out at 95 per cent LVR.
Currently the duo say their software is 85 per cent accurate, with an aim for 95 per cent accuracy in the next 12 months. The software even has ways of predicting gentrification by looking at other suburbs which have already gentrified.
Proportunity has secured £5 million in credit to begin issuing loans and raised a further £2.7 million in funding. It’s backed by several big real estate players, including Savills, Concrete, the joint venture between Starwood Capital, JLL and Seedcamp, and Matt Robinson of Nested.