This one’s a simple one and I can tell you in a sentence. Doctors can’t get mortgages.
Yep, that’s right. The reason is that if you’re a successful doctor with your own practice, you’re likely to be classified as self-employed. That’s why, when a close family friend of mine recently went to apply for a short-term mortgage, he was rejected by several major banks, despite making close to $400K per year and having material equity in his subject property. When doctors can’t get mortgages, you know something is broken.
There are tens of thousands of people like this that are rejected by banks for reasons that are often irrational. You see, in the wake of the GFC, lending markets have been dominated by risk averse lenders and borrowers that favour the Big 4 banks that are usually perceived as a more secure source of capital. Unbelievably during the GFC, non-bank lending dropped from c.15% to c.5% of total lending to households within 2 years.
Today however the tides have started to turn. APRA’s regulatory-heavy lending environment and the impacts of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry have resulted in ever tightening lending practices for banks. Over time, banks have materially reduced their risk appetite and have ‘simplified’ their offers which is resulting in, well, doctors can’t get mortgages.
But it isn’t only doctors. Banks are pulling back ever further into rigid lending frameworks that struggle to accommodate and anything that falls outside of their lending framework. Getting a short-term mortgage from a bank is all but impossible these days regardless of who you are. If it isn’t a 30 year mortgage to a couple in metro Sydney with an employment track record at a corporate, it’s often just too hard. So where does a doctor that can’t get a mortgage go? - Private debt. AKA, the wild west.
Without a dominant, trusted and efficient online brand, the short-term, first mortgage sector is still up for grabs. Today it broadly consists of bespoke loans made by privately owned, specialised lenders such as fund managers, family offices, high net worth individuals and solicitor funds. Unlike traditional banks, these lenders, their target market and their terms are diverse, inconsistent and often unethical, making dealing within this sphere an opaque exercise for borrowers. It’s an area of the market that virtually any commercial lawyer is familiar with as it’s almost guaranteed that her or she has assisted a client to borrow or lend, recover a loan, challenge unfair terms or has personally lent money via a solicitor fund. These are all issues that lawyer, mortgage broker and founder Jack Oreilly saw firsthand. To put it bluntly, mortgage backed private debt remains the world of the loan shark and it’s time for change.
The non-bank lending sector has been operational in Australia for decades but has only recently come to the forefront of the residential property market. With falling returns on offer from more mainstream parts of the debt market, investors are looking to diversify into new, secured asset classes that can deliver better returns in a world of undulating stocks and bonds. The flow of capital into private debt is in turn increasing the depth of alternate lending options available to borrowers and ultimately resulting in increased education and demand for these products.
The value proposition of non-bank lenders has long been recognised and the historical challenge has, at least in part, been consumer sentiment favouring major banks. Between shifting consumer sentiment away from banks, regulatory developments, historic low interest rates, the flow of capital into private debt markets and shifting strategic focuses within the banks, market conditions heavily favour the rise of more nimble lenders like Funding.com.au. Against this backdrop, non-bank lenders are beginning to reclaim market share, though predominantly in the small business lending, investment property and consumer finance verticals.
In recent years we have seen brands like MoneyMe, Prospa and Moula use technology to build trusted, efficient, online portals through which consumers access unsecured personal and business loans. The secured lending sector has been slower to evolve. The technology and processes needed to efficiently write and recover mortgages that are secured over real property and involve registered securities, property valuations and associated regulatory frameworks are always going to be more complicated, but the issue is real and someone is going to tackle it and that someone is Funding.com.au. It is building out a platform and a brand that it hopes will position it to become Australia’s trusted home of non-bank mortgages.
Whilst there are many private mortgage lenders, a small number of which source capital via a peer-to-peer marketplace, Funding.com.au is the only platform which accepts retail investors and is also fully licensed for consumer credit. The vast majority of secured, non-bank lenders won’t provide consumer credit. The simple reason is that once you provide consumer credit, you expose yourself to regulatory nightmare which is the National Credit Code and if you’re a lender that’s doing things in a way that is or might be perceived to be predatory or just unfair, you’re going to want to avoid that world altogether. As a corporate lawyer I can tell you that the oldest trick in the unethical lender’s handbook is to force a borrower to borrow funds via a company so that the lender may avoid the National Credit Code which doesn’t apply to companies.
Funding.com.au is doing things differently. It’s ability to accept retail investment as well as its consumer lending licence mean that it can lend money to and accept investment from, well, anyone. That includes you. It has created a secure and trusted platform that gives investors direct access to short and medium-term first mortgages that deliver secure, property backed returns in the order of 6-8%. Returns that have traditionally been guarded by the banks and sophisticated investors by are now accessible with investment parcels of as little as $5,000. Conversely, for all the doctors out there, you can now access credit without having to negotiate a bespoke loan with an unknown lender. No more back room deals, term sheets, lawyers and custom credit negotiations. Just one, trusted space for a loan on largely homogeneous and fair terms.
When you consider all of this in the context of the fact that Funding.com.au has returned 100% of all capital and interest to its investors whilst simultaneously growing its loan book over five times in the last 18 months; that’s why we invested in Funding.com.au.
So, whether you’re a doctor, a lender or a borrower or just a guy or a gal that’s sick of earning 2% on your bank balance, jump on to Funding.com.au, would love to know what you think.
This one’s a simple one and I can tell you in a sentence. Doctors can’t get mortgages.
Yep, that’s right. The reason is that if you’re a successful doctor with your own practice, you’re likely to be classified as self-employed. That’s why, when a close family friend of mine recently went to apply for a short-term mortgage, he was rejected by several major banks, despite making close to $400K per year and having material equity in his subject property. When doctors can’t get mortgages, you know something is broken.
There are tens of thousands of people like this that are rejected by banks for reasons that are often irrational. You see, in the wake of the GFC, lending markets have been dominated by risk averse lenders and borrowers that favour the Big 4 banks that are usually perceived as a more secure source of capital. Unbelievably during the GFC, non-bank lending dropped from c.15% to c.5% of total lending to households within 2 years.
Today however the tides have started to turn. APRA’s regulatory-heavy lending environment and the impacts of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry have resulted in ever tightening lending practices for banks. Over time, banks have materially reduced their risk appetite and have ‘simplified’ their offers which is resulting in, well, doctors can’t get mortgages.
But it isn’t only doctors. Banks are pulling back ever further into rigid lending frameworks that struggle to accommodate and anything that falls outside of their lending framework. Getting a short-term mortgage from a bank is all but impossible these days regardless of who you are. If it isn’t a 30 year mortgage to a couple in metro Sydney with an employment track record at a corporate, it’s often just too hard. So where does a doctor that can’t get a mortgage go? - Private debt. AKA, the wild west.
Without a dominant, trusted and efficient online brand, the short-term, first mortgage sector is still up for grabs. Today it broadly consists of bespoke loans made by privately owned, specialised lenders such as fund managers, family offices, high net worth individuals and solicitor funds. Unlike traditional banks, these lenders, their target market and their terms are diverse, inconsistent and often unethical, making dealing within this sphere an opaque exercise for borrowers. It’s an area of the market that virtually any commercial lawyer is familiar with as it’s almost guaranteed that her or she has assisted a client to borrow or lend, recover a loan, challenge unfair terms or has personally lent money via a solicitor fund. These are all issues that lawyer, mortgage broker and founder Jack Oreilly saw firsthand. To put it bluntly, mortgage backed private debt remains the world of the loan shark and it’s time for change.
The non-bank lending sector has been operational in Australia for decades but has only recently come to the forefront of the residential property market. With falling returns on offer from more mainstream parts of the debt market, investors are looking to diversify into new, secured asset classes that can deliver better returns in a world of undulating stocks and bonds. The flow of capital into private debt is in turn increasing the depth of alternate lending options available to borrowers and ultimately resulting in increased education and demand for these products.
The value proposition of non-bank lenders has long been recognised and the historical challenge has, at least in part, been consumer sentiment favouring major banks. Between shifting consumer sentiment away from banks, regulatory developments, historic low interest rates, the flow of capital into private debt markets and shifting strategic focuses within the banks, market conditions heavily favour the rise of more nimble lenders like Funding.com.au. Against this backdrop, non-bank lenders are beginning to reclaim market share, though predominantly in the small business lending, investment property and consumer finance verticals.
In recent years we have seen brands like MoneyMe, Prospa and Moula use technology to build trusted, efficient, online portals through which consumers access unsecured personal and business loans. The secured lending sector has been slower to evolve. The technology and processes needed to efficiently write and recover mortgages that are secured over real property and involve registered securities, property valuations and associated regulatory frameworks are always going to be more complicated, but the issue is real and someone is going to tackle it and that someone is Funding.com.au. It is building out a platform and a brand that it hopes will position it to become Australia’s trusted home of non-bank mortgages.
Whilst there are many private mortgage lenders, a small number of which source capital via a peer-to-peer marketplace, Funding.com.au is the only platform which accepts retail investors and is also fully licensed for consumer credit. The vast majority of secured, non-bank lenders won’t provide consumer credit. The simple reason is that once you provide consumer credit, you expose yourself to regulatory nightmare which is the National Credit Code and if you’re a lender that’s doing things in a way that is or might be perceived to be predatory or just unfair, you’re going to want to avoid that world altogether. As a corporate lawyer I can tell you that the oldest trick in the unethical lender’s handbook is to force a borrower to borrow funds via a company so that the lender may avoid the National Credit Code which doesn’t apply to companies.
Funding.com.au is doing things differently. It’s ability to accept retail investment as well as its consumer lending licence mean that it can lend money to and accept investment from, well, anyone. That includes you. It has created a secure and trusted platform that gives investors direct access to short and medium-term first mortgages that deliver secure, property backed returns in the order of 6-8%. Returns that have traditionally been guarded by the banks and sophisticated investors by are now accessible with investment parcels of as little as $5,000. Conversely, for all the doctors out there, you can now access credit without having to negotiate a bespoke loan with an unknown lender. No more back room deals, term sheets, lawyers and custom credit negotiations. Just one, trusted space for a loan on largely homogeneous and fair terms.
When you consider all of this in the context of the fact that Funding.com.au has returned 100% of all capital and interest to its investors whilst simultaneously growing its loan book over five times in the last 18 months; that’s why we invested in Funding.com.au.
So, whether you’re a doctor, a lender or a borrower or just a guy or a gal that’s sick of earning 2% on your bank balance, jump on to Funding.com.au, would love to know what you think.