LendInvest, an online platform for financing short-term mortgages, has signed a warehouse financing deal with Australian investment bank Macquarie.
The deal gives LendInvest access to over £40 million to fund mortgages with. LendInvest itself does not lend money but is a platform that matches short-term mortgage lenders with funding, either from retail investors or institutional investors. Investors get returns of around 5% per annum.
The Macquarie funding deal means the London startup now has access to over £260 million of institutional money it can finance mortgages with. Four other banks currently lend over the platform, although LendInvest would not say which ones. A spokesperson did say that one is a UK challenger bank.
LendInvest CEO and cofounder Christian Faes says in a statement announcing the deal:
LendInvest is creating the most diverse capital base of any mortgage lender in the market which is a key differentiator for our business. By welcoming another significant institution and funding line to our business, we are putting in place the foundations for a very scalable move into longer duration lending and ultimately the mainstream UK mortgage market.
Macquarie is a leading global financial institution with a proven deep knowledge of the UK mortgage market. We look forward to working with the Macquarie team as we expand our product range with longer term loans that are attractive to them and other capital markets investors. This warehousing line will assist us as we move towards being able to securitise our assets for institutional investors.
Securitisation is where financial institutions cut up and sell on loans they have sold — essentially selling the future income from loans. Funding Circle, another peer-to-peer lending platform, are doing this with their loans.
LendInvest plays in the short-term, or bridging, mortgage market. This is generally for property developers who buy a place, do it up over say 6 months, and then flip it for a profit. It’s a fairly specialised market and one that LendInvest, which traces its roots back to 2008, already has a 10% share off.
The fintech startup last year lent £300 million over its online platform and has lent over £620 million since July 2013. CEO Faes told BI earlier this year that the platform is now looking to move into the buy-to-let market.