FrontYa launches BNPL for property purchases

author-avatar By
on February 23, 2022 Fact Checked
FrontYa launches BNPL for property purchases

Property technology start-up FrontYa aims to increase the purchasing power of Australians to overcome property market hurdles.

The property platform will double the deposit of property buyers in return for a 25% cut of the property's capital gain when sold or refinanced within six years. 

The term of FrontYa's contribution is six years, though if customers cannot exit in that timeframe, the company's share of the home's increase in value will grow by two percentage points for every additional year.

This means if a borrower exists after seven years, FrontYa's cut of the capital gain will be 27%.

FrontYa reportedly only makes money when a customer’s property increases in value - proceeds are first used to repay the lender, and remaining proceeds go to FrontYa.

From there if there are insufficient funds to repay all of FrontYa's contribution, the company takes the loss at no penalty to the customer.


FrontYa says this model differs significantly from rent-to-own schemes - FrontYa customers own their property from day one and pay nothing back beyond the initial contribution unless they achieve value growth in their property.

Founder and CEO of FrontYa Nir Golan said FrontYa’s aim is to close the deposit gap for aspirational home buyers.

“By doubling a customer’s deposit and stamp duty savings, purchasing power is increased so they can enter the property market sooner, in higher potential properties and in suburbs they actually want to live," Mr Golan said.

"Most importantly FrontYa customers buy secure in the knowledge they are home owners."

Mr Golan says FrontYa customers are also the beneficiaries of the assurance that if their property does not increase in value, provided they sell or re-finance within the six-year term, the only payment FrontYa requires is the initial funding. 

The launch of FrontYa comes following CommBank's venture arm capital x15 investing in rent-to-own startup 'OwnHome'.

Capital Gains Scenario

A young couple are looking to purchase their first home at a price of $1,000,000.

The couple currently have a $100,000 deposit including stamp duty.

FrontYa would provide double the deposit and stamp duty, so in this case $200,000.

After four years the couple decide to sell the home for something larger with the intention of raising a family.

To meet requirements, the couple would pay back the $100,000 FrontYa provided, plus 25% of the property's increase in value over that period.

They make a $100,000 gain on the property in four years, so FrontYa would also take $25,000 of that figure.

The young couple would need to weigh up $75,000 in capital gains, versus waiting longer to save a deposit, versus paying a higher lenders mortgage insurance premium and a more expensive mortgage rate that comes with a higher loan-to-value ratio (LVR).


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
UNLIMITED REDRAWSSPECIAL OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.

Variable Home Loan (Principal and Interest)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of May 26, 2022. View disclaimer.


Image by Rodnae Productions via Pexels

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

Latest Articles

author-avatar
Jacob Cocciolone joined the Savings team in 2021 as a Finance Journalist. Driven by a passion for keeping Australians up to date with the latest financial news and trends, his areas of interest include financial technology, investing, property and motoring.

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree
to the Savings Privacy Policy