As part of the agreement, Ahauz will offer customers of Promise Money an equity loan of up to 25% of the property value in order to boost their deposit, taken in addition to a primary mortgage from a high street lender.
As Ahauz’s equity loan is taken alongside the primary mortgage, it increases the borrowing power from 4.5 to 6 times income.
Karthik Srivats, co-founder of Ahauz, said: “Our partnership with Promise Money is another important step for us as we open up the opportunity of home ownership to an increasingly wide audience.
“We’re very much looking forward to working with them and seeing what can be achieved in a lending environment where we expect the popularity of equity loans to balloon over the next few years.
“This will only accelerate, of course, with the closure of the Help To Buy scheme.”
Steve Walker, managing director of Promise Money, added: “Ahauz’s loans are effectively a private sector version of the Help To Buy scheme.
“They are proving to be incredibly popular because they satisfy a gap in the market for products that don’t just allow first-time buyers to transact, but buy the home they actually want.
“We expect that a lot of our customers will appreciate the ability to increase their overall budget and get that extra bedroom or buy closer to their kid’s school.
“The equity loans are not only beneficial for first time buyers, but also for banks and building societies as they can attract more first-time buyers without increasing their risk appetite.
“Although private equity loans are currently not accepted by all the lenders, given the demand we have been seeing for such products, we expect most lenders to start accepting equity loans in the near future.
“Hopefully this will follow the footsteps of the Help to Buy scheme which started only with a few lenders but has now become widely accepted in the lender market.”
