StrideUp is aiming to provide an alternative to the government’s Help to Buy scheme.
Image source: Sakeeb Zaman & Rohan Trivedi/StrideUp.
Digital home finance startup StrideUp has raised £280m in funding to bring a new shared ownership mortgage product to the UK’s first-time buyers.
The company is also partnering with specialist real estate debt investment manager ARA Venn to help first-time buyers avoid the “deposit trap”.
Customers will be able to buy up to 80 per cent of their new home and rent the remainder until they are able to purchase more of it, with the remaining cost frozen at the purchase price.
This will allow people to buy the remainder of the house at the same price, even if house prices rise, and any losses from house price falls will be shared with StrideUp.
“StrideUp’s mission is to build a more affordable and accessible way for first-time buyers to get on the housing ladder and that has never been more relevant,” StrideUp co-founder and CEO Sakeeb Zaman said.
“With surging house prices and constraints on traditional mortgage lending, deposits are often falling short, and at the same time people are spending more on rent and living costs.”
With StrideUp, prospective homeowners only need a 10 per cent deposit and will be able to borrow up to six and a half times their income, while most lenders restrict this to four and a half times.
“We are excited to bring an innovative, scalable product to market, solving a hard real-world problem for an entire generation that is priced out of home ownership,” StrideUp co-founder Rohan Trivedi said.
“We believe this funding is an early step in making a material dent in the challenges facing first-time buyers realise their aspirations.”
Unlike the government’s Help to Buy scheme, which was started in 2013, StrideUp’s product can also be used to buy second-hand homes, rather than just new builds.
The government scheme is also set to end in March 2023.
“Help to Buy has made a major contribution to the FTB market but it is ending and the StrideUp plan is a genuine replacement that’s much less restrictive and more flexible for buyers,” ARA Venn managing partner Gary McKenzie-Smith said.
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