Digital mortgage broker Tembo’s mortgage decisioning platform was selected as the Innovation of the Year at the British Bank Awards. The Tembo platform is aimed at helping underserved buyers and homeowners discover their ‘true’ buying budget from a growing range of specialist mortgage schemes.
Consumers are currently underserved by intermediaries
The UK’s flagship buying schemes have largely operated in silos within the advice industry. Specialist brokerages have been formed around single products: for example, Shared Ownership advisors who specialise in helping buyers utilise the government scheme. High street banks & lenders, innovative ‘neo-lenders’, housing associations and building developers are all coming up with their own solutions to the issue. However, these solutions are largely unknown by consumers and underused by intermediaries who are struggling to keep pace with a rapidly changing landscape.
Intermediaries that advise on a wider range of mortgage products have been unable to grapple with the breadth of these schemes, and aggregator and comparison sites don’t go beyond traditional mortgage products. Eligibility criteria is complex, and for many schemes, they don’t appear on traditional sourcing platforms, meaning a broker would need to qualify a buyer for each scheme individually – a process that could take hours, or even days. For others, the time it takes to find a solution for a buyer failing affordability (and the risk of no solution being found), mean that customers are turned away prematurely – before all avenues are explored.
It’s for this reason that 83% of all Tembo customers have previously been turned down by a mortgage broker or lender. With the arrival of Consumer Duty in July ’23, intermediaries will need to evidence how they are presenting a customer with all the myriad options available to them in the advice process. Without technology, this will be no mean feat.
Technology
Tembo’s platform is built on proprietary decisioning technology, developed by Chief Product Officer Eddie Ross, (ex Mojo Mortgages, Quint Group) and Chief Technology Officer Geoff Wright (ex-Babylon, SilkFred). The eligibility criteria for each of the 17 buying schemes has been written into Tembo’s code base, meaning an applicant can be assessed for all schemes simultaneously.
After a customer completes a Tembo fact find: telling them about themselves, anyone they are buying with, and anyone that can support their purchase, the technology calculates their eligibility for each scheme, and then their affordability. Live interest rates are pulled in in order to calculate indicative monthly repayments.
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The fact-find itself takes an average of under 7-minutes for a user to complete, but the decisioning itself runs in under five seconds.
Affordability boosting schemes are grouped into four categories:
- On your own: 5.5x and 6x income borrowing, Armed Forces Help to Buy, Deposit Unlock scheme.
- With a guarantor: Solutions where a family member or friend’s income or savings are used to support a purchase – schemes include Income Boost (Joint Borrower Sole Proprietor) mortgages, traditional savings as security guarantor mortgages and Deposit Loans.
- With a family remortgage: Leveraging existing family property to create a larger deposit for buyers, lowering LTV to reduce interest payments and helping them to buy sooner.
- Part buy, part rent: A host of schemes (including the government’s), whereby a buyer can purchase a portion of a home and pay rent on the remainder.
Their technology has been picked up by a range of partners to whom Tembo are licensing their platform.
Lifting the hood on Shared Ownership
Previously, it wasn’t possible for a consumer to get an understanding of their borrowing potential with Shared Ownership without speaking to one of a small pool of ‘vetted’ brokers/intermediaries.
Through its technology, Tembo is lifting the hood on this. They have built in the different rental percentages for all housing associations offering Shared Ownership, as well as the criteria in order to show customers an accurate eligibility result in seconds.
In addition, the criteria for the private schemes Keyzy, StrideUp, YourHome and Wayhome is integrated into the platform: offering buyers with no deposit a potential solution, and also allowing buyers to expand into looking at older properties.
Richard Dana, CEO at Tembo says, “We’re delighted to see the latest release of our homebuyer platform recognised at the British Bank Awards. Our technology is helping homeowners and would-be buyers turn a ‘no’ into a ‘yes’. For too long, buyers have been underserved by an industry that values siloes and exclusives above their duty to consumers. In under ten minutes, a would-be buyer can not only discover their true buying budget, but they can also compare what the monthly repayments might be on a shared ownership mortgage, in comparison to a Joint Borrower Sole Proprietor mortgage. Until now, that process would either involve a consumer engaging with multiple brokers, or for them to undertake extensive research themselves. With an average boost to affordability of £82,000 – we are incredibly proud of the work we’re doing to make ownership possible for a new generation of buyers.”
