Broker channel pivotal in AMP-Bricklet FHB deal

Described as an “industry first”, and initially only available through the broker channel, the collaboration aims to “help more Australians get into the property market sooner”.

It works by enabling owner-occupiers with a low deposit to offer a portion of their home (typically 20 per cent) as equity ownership to property funds via the Bricklet platform. The investor(s) then provide the funds to make up the home deposit shortfall required to avoid Lenders Mortgage Insurance and receive an equity stake in the property, relative to their contribution.

The home buyer then pays the investor an occupancy/rental fee, as well as usual mortgage repayments, until they purchase it back. At any time, the homeowner can ‘buy out’ the investor portion of the equity, if they so choose to, or sell the property (with investors receiving their share of the profit).

AMP Bank has become the first lender to partner with Bricklet, offering mortgages to broker clients using the proptech offering.

To qualify, applicants must demonstrate they can meet AMP Bank’s lending and serviceability criteria, in addition to the occupancy fee to Bricklet, the two partners outlined.

AMP Bank group executive Sean O’Malley, said: “Despite falling property prices in Australia, we know many people are still struggling to save a deposit for their first home.

“Owning property is an important part of building long-term wealth and financial security, so we are focused on supporting more Australians to take this important step earlier in life. This offer provides a different option for those who haven’t yet saved a large deposit but are earning enough to meet the ongoing financial commitment of a home loan.

“AMP Bank is pleased to have partnered with Bricklet to support Australians in realising their home ownership aspirations.

“It’s an example of AMP Bank innovating, leveraging the expertise of our partners to move quickly, supporting our customers, and driving our growth aspirations for the bank.”

Government schemes not an option for some

As Bricklet CEO Darren Younger explained: “We’re enabling people to get a mortgage for their home and then rent the remaining piece from an investor.

“There are now a variety of opportunities for homebuyers, but it comes down to how they want to purchase property, and what they qualify for.

“One of the main reasons we created this was because a lot of people don’t qualify for government schemes. They either earn a bit too much; have already owned before; don’t meet the price cap; or miss out because spots are limited.

“Buyers get all the benefits of living in the home, and all the gains from price growth of their share of the house,” Mr Younger stated.

“The proposition has received strong interest and planning is underway to expand the offer for more prospective property buyers,” he confirmed.

The broker channel is key 

Mr O’Malley confirmed to The Adviser that the partnership was initially only available via the broker channel, stating: “This will be a proposition that we take to market via the broker channel, not our new direct channel..."

“We'll be the funder for those mortgages and so our relationship will be with the homeowner in a regular mortgage point of view."

When asked how long homeowners are expected to hold on to their equity, Mr Younger said they expected it would be between five to 10 years.

“This is all new, so we don't really know, but I think it's five to 10 years ... based on the assumption that the property value will go up and they will pay off a little bit of a mortgage, we would expect some kind of refinance to happen within five to 10 years, but they can sell out sooner than that time certainly," Mr Younger clarified.

Mr Younger told The Adviser that the AMP partnership marked the proptech's first introduction to the broker channel, suggesting it could expand further into broker partnerships in future.

“We will extend [the small pilot with a with a few brokers] the offering … to more brokers, but at the moment, it's AMP Bank that we're working with.”

My O’Malley added that both AMP BDMs and Bricklet staff will work with accredited brokers to educate the channel on the offering, as they roll it out progressively.

Number and objectives for success

Mr Younger revealed that 15 home buyers had already been approved under the pilot, with another 80 in pre-approval stage.

"This [has been] without doing any kind of mainstream marketing," he said, "so, from what we've seen so far we think that there's going to be a lot of appetite for this.

“I think once we sort of really go out into market, we will see hundreds of homes being done very, very quickly."

Getting into resi property sooner

According to Finder First Home Buyer report, released in August 2022, “three in four first-home buyers paid, or are planning to pay, less than 20 per cent for a deposit,” which shows most buyers would prefer to enter the property market sooner, and the opportunity to build equity earlier in life, AMP and Bricklet highlighted.

According to the bank, becoming the first lender to partner with Bricklet forms part of AMP’s strategy to “leverage and build partnerships to support [its] growth,” - and follows the launch of AMP’s digital mortgage with Nano in October 2022.

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