Innovation That Matters

London housing market | Photo source Pixabay

Startup offers loans to first-time buyers based on AI pricing prediction

Property & Construction

A startup is using machine lear

London is notorious for its unaffordable property prices. With the average London home priced at around 475,000 GBP, first-time buyers are finding it all but impossible to get on the housing ladder. This is because most lenders require a deposit of at least 10 percent of the purchase price. Now startup Proportunity would like to offer help. The company claims that its machine learning platform can accurately forecast future house prices in different areas of London. Based on this modelling, the company offers equity loans to boost the deposit for first-time home buyers in areas that will see the greatest growth.

Proportunity will offer equity loans of up to 15 percent of a property’s price. Additionally, buyers can use this loan to increase their deposit to qualify for mortgages with a lower loan-to-value ratio. These mortgages tend to command lower interest rates. The Proportunity loan is interest-only for its five-year duration. After five years, buyers must either sell the house or remortgage it, and repay the Proportunity loan at 15 percent of the current market price. This means that if the value of the house goes up, the amount buyers will need to pay back will also go up. If the price goes down, Proportunity loses money on the deal.

The Proportunity loan is interest-only. This combined with monthly repayments equates to much less than if buyers took out a 95 percent mortgage at a higher rate. The company has raised 2.7 million GBP in funding. They have also secured 5 million GBP in credit to begin making equity loans and further develop its forecasting technology.




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