In the Spotlight with Cameron Orcutt, OnLadder

“We are a broker-based deposit lender: the idea is that we partner with potential buyers and finance the deposit for them.”

FR: Who are OnLadder?

One of the biggest problems that first-time buyers have faced for a long time has been putting together a sufficient deposit.

We believe there is a better way to help prospective homebuyers get the deposit they need, and that’s what we hope to achieve with OnLadder. We are a broker-based deposit lender: the idea is that we partner with potential buyers and finance the deposit for them.

The money we lend to top up buyers’ deposits can be repaid by making low monthly payments over the life of the loan and using the equity in your home at the time of remortgage or sale of the property to pay us back, reducing the need for buyers to pay out of pocket.

This is a personal issue for us. Both myself and my co-founder Sam Hatley are in our early 30s, and despite having successful careers, neither of us have managed to own a home. We’re bringing fresh eyes to a problem that’s been around too long, and building the kind of product we’d use ourselves to get to the housing ladder. If we know it would work for us, then that’s a good sign that it could benefit other hopeful homeowners as well.

FR: What specific problems are first-time buyers facing today?

The difficulties that first-time buyers face in saving the deposit they need are not new, but it is a problem that has undoubtedly worsened.

The rate at which house prices have risen in recent years has been extraordinary: a potential buyer could have put together what would be the equivalent of a 10% deposit, but then, in a matter of weeks, it could be insufficient due to the further increases in house prices. If you’re not lucky enough to have loved ones who are in a position to back your deposit savings, then it’s incredibly difficult to save a decent sized pot.

And because of those difficulties, it’s taking years for first-time buyers to finally get the money they need: A Barclays study this year suggested it takes the typical new owner eight years to get a sufficient deposit, which is far too long.

Moreover, it seems that the situation will worsen. Help to Buy is closing this year, which has been a valuable way for people to buy a home with just a 5% deposit, while the cost of living crisis has only intensified, making a deposit a distant dream. for most first time buyers. buyers

FR: How does OnLadder seek to resolve this?

Clearly, first-time buyers need help building a deposit. We believe that OnLadder can do that in an innovative way.

We only require a 5% deposit from the homebuyer and then top up the rest so they have enough to buy the home they need. Crucially, this can make a real difference in the size and cost of your first-rate mortgage; As brokers know, the difference in payouts can be staggering between those who buy with a 5% deposit and those who buy with a 10% or 15% deposit. .

The buyer can then make low monthly payments for the OnLadder loan, with most of the amount paid back once it’s time to remortgage or once it’s sold. Given the housing shortage, unfortunately it is only more likely that we will see property prices rise even more in the coming years. Fortunately, this will give our customers more options when it comes to paying off their OnLadder loan.

It works for mortgage lenders, too: loan-to-income and affordability stress tests can make it harder for them to accept high LTV loans, even for those with excellent loan prospects. However, if a borrower comes to them with an OnLadder deposit agreement, those problems are avoided.

FR: What feedback have you received so far from borrowers, brokers and lenders?

The response has been incredibly positive, and that’s very gratifying: we know this proposal can play a crucial role in the real estate market, but it will only work if brokers and lenders understand and support it.

Runners in particular have really liked the idea. No one is better placed to understand the difficulties potential buyers face in putting together a deposit, as well as the difference the size of the deposit can make to mortgage affordability.

The attitude of the lenders has also been very welcome. We had a C-Suite executive tell us, “I don’t know why we wouldn’t do this,” which is a resounding endorsement in my eyes.

As for the borrowers, they recognize that OnLadder offers a solution to their deposit problems. Importantly, it also means they still own 100% ownership. No one begins the home buying journey thinking they just want a piece of the property; you want to know that the whole house is yours and we can help you achieve it.

FR: What can we expect from OnLadder for the rest of 2022?

It’s already been an exciting and productive year for OnLadder, but there is much more work to be done. The first task is to finalize the lending partners with whom we will go to market when the proposal is officially launched.

We also want to lay the groundwork for our next fundraiser so that we are well positioned to support many more first-time buyers.

As always, highlighting the issues facing first-time homebuyers and promoting solutions that can help them achieve their dream of homeownership will be at the core of everything we do.