Niche fintech startup Bridgit has been capitalising on volatility in the property market over the past year to secure $1 billion in loan applications, putting the company on track to at least double loan volumes over the next 12 months.
Bridgit, a specialist online bridging loan provider, last year was tapping into an upsizing boom as the market was rising. In recent months there has been a rush to downsize in the wake of higher interest rates.
While Bridgit co-founder Aaron Bassin tells Business News Australia that market conditions do not dictate the strength of business volumes, the banking royal commission has set Bridgit up to capture an unmet market of people wanting to buy their next home before selling their existing property first.
“We compare ourselves to AfterPay for home loans but instead of buy now pay later, our borrowers buy now sell later,” says Bassin, who is a finalist at the 2022 Sydney Young Entrepreneur Awards.
“Without a bridging loan solution, the alternative is to sell your house now and then rent somewhere or move in with family members. You are basically in this temporary homeless state which is stressful and costly.
“We’re just trying to break down the barriers and make bridging loans more accessible so Australians can make better decisions when buying and selling property.”
Bassin says since the banking royal commission, major banks have scaled back their offering of short-term bridging loans to focus on longer term home loan products.
While bridging loans usually attract higher interest rates than standard home loans, Bridgit offers three months interest free on its bridging loans which mature in six months. The company charges an upfront fee from 1.65 per cent of the loan’s value that can be paid out after the original home is sold.
“Bridgit is about making the whole bridging loan experience more enjoyable,” says Bassin. “Our edge is our technology solution; it’s purpose built for our customers and our product.”
Bridgit offers customers bridging loans through an online application with same-day approvals and no repayments until the loan reaches maturity.
Since launching its services 14 months ago, the average loan written by Bridgit has been $1 million. The size of Bridgit’s average loan is larger than an average mortgage because the debt straddles both properties in the buy and sell stage.
Bassin says after a heady year of growth, lending volumes are continuing to rise for the company.
“We’re a young business and every month our ambition is to grow and provide more customers with our product. We’re focusing on growing our business and over the next 12 months we’re hoping to have $2 billion to $3 billion in loan originations.”
Bridgit is also exploring new distribution channels to bring the product in front of more homebuyers.
“We’ve launched with Australia’s largest aggregator, Loan Market Group, and we will be bringing on more aggregators so brokers can help their clients with a bridging solution,” he says.
Bridgit, which was formerly known as TechLend, was founded by Bassin, the former head of strategy at online lender MoneyMe, and mortgage broker Nick Jacobs.
The company last year raised $13.2 million in equity and secured $100 million in venture debt funding. Bassin says additional funding will be needed as the company’s loan book grows.
Clients from Sydney accounted for 40 per cent of Bridgit loans over the past year and 30 per cent each from Melbourne and Brisbane.
Bassin says downsizers, predominantly baby boomers, accounted for 60 per cent of its business over the past year.
“The current environment is becoming a catalyst for a lot of Australians looking to downsize to free up equity in their home,” he says.
“We help them buy the property they want before they’ve sold and that gives them a lot of certainty around what they can buy. They can buy on their terms without having to sell first.
“But it’s not only downsizers. It’s also others who are overexposed with their current mortgage and who want to stabilise their outgoings (due to rising interest rates) and focus on lifestyle rather than making higher payments to their lender.
“Our mission has always been to challenge the traditional lending model and provide Australians with a new solution that actually helps them progress. Our customers have loved the flexibility of being able to use a fast bridging-loan solution.”
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