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Mortgage fintech completes capital raise

An online mortgage marketplace has received a funding boost from a venture capital firm to bolster its lending operation.

Online peer-to-peer platform Funding.com.au has raised $5 million from local venture capital fund Equity Venture Partners (EVP).

According to the fintech, founded by mortgage broker Jack O’Reilly in 2015, the short-term lender has benefitted from “tailwinds” linked to “extreme volatility in equity markets”, which it said has forced investors to look for high-return alternatives.

Mr O’Reilly added that historically low interest rates and banking regulations have also driven a surge in demand for both the platform’s investment products.

“When you’re earning 1 per cent interest at the bank and facing massive uncertainty in equity markets, the idea of lending to home owners with first mortgage security and 7 per cent interest makes sense,” he said.

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“But finding borrowers, conducting diligence and doing the paperwork is usually impossible. Our platform provides investors with direct access to residential mortgages with a term of three months to three years.”

Mr O’Reilly also claimed that borrowers have been attracted by Funding.com.au’s short-term lending proposition.

“What people don’t realise is that banks often won’t lend short term. There are thousands of creditworthy home owners that would like to borrow but can’t because they are not looking for a 30-year mortgage. That’s the area of the market that we target,” he said.

Commenting on EVP’s investment, Daniel Szekely, who has now joined Funding.com.au’s board, said the opportunity was “obvious”.

“We are in a market in which secure high-yield investments are hard to find. Australians understand the advantages of a loan secured by a residential first mortgage with a low loan-to-valuation ratio, but it is almost impossible for individuals and SMSFs to efficiently find, vet and lend money in this way,” he said.

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“Funding.com.au makes it possible for people to do what they already want to do – lend and borrow in a secure and efficient way.”

[Related: Banks will need to change the way they assess risk: Volt CEO]

Mortgage fintech completes capital raise
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