Fintech Start-up Enables Property Owners To Sell Debt

MyBrix allows property owners to sell their mortgage debt to investors who buy fractional interests in that property

A peer-to-peer platform that enables buyers to fund and invest in Australian real estate is set to launch next month, promising no interest and no repayments for homeowners. MyBrix is a Sydney-based fintech start-up that allows property owners to sell their mortgage debt to investors who buy fractional interests in that property. The property owners get to pay out their bank loan and both the owner and the investor share in the capital growth of the property.

Brian Stevens, Founder and Chief Executive Officer of MyBrix, said the platform was a world first and unlike other attempts at real estate fractionalisation, it empowers homeowners to retain ownership while accessing funds for their financial needs and is available for any residential property in Australia, not just a curated subset.

“It’s a peer-to-peer platform where we match investors, who have a desire to invest in property, with property owners who have a desire to not pay any interest or repayments,” he said. “We do this by creating an initial ‘brix offer’, where we get all the details about the property and growth and put that on our platform. The investors look at that and see how it links with their investment goals and strategies and decide whether to invest it or not.”

Stevens said the value of every property is divided into 10,000 ‘brix’ for investors to purchase. So, for a $1 million property, each brix is worth $100. “So, you decide as the owner, how many brix to sell to fund whatever you want,” Stevens said. “If you have a half-million mortgage and you want to extinguish that to do renovations or take a holiday, then you would fund $600,000 in brix.”

He added that MyBrix would see mortgage stress become a thing of the past, with property owners able to choose how they spend their income without the burden of increasing monthly bank loan repayments. He said property owners would no longer fear mortgage cliffs or be forced to sell due to jumps in repayments and mortgage prison would no longer exist as credit assessment and serviceability no longer apply.

“Normally the bank looks at the people behind it and goes, ‘Are you good enough? What’s your credit history?’ We’re turning that around the other way and saying, ‘What’s the quality of the property? What’s the property going to do? What are the growth aspects of the property?’” said Stevens. “We’ve created an algorithm called the Investment Attractiveness Rating that uses 2000 data points to give every property a score out of 1000, to give guidance to investors on where the properties will potentially give them the best return over a longer term.”

Stevens said there was no limit on what sort of home an owner could purchase or any price caps, despite saying properties at the lower end were likely to be “better beneficiaries”. “We haven’t put any limitations on it, only because we want to make it equitable for everyone to try and get involved,” he said. “We don’t make the funding decisions - the investors make them based on the information available on the property. The maximum funding time is 10 years and then they have to sell or refinance after that period of time.”

Benefits for investors include retaining their assets and keeping properties in the rental pool, rather than having to sell or increase rents to unsustainable levels. There will be less pressure on rental rates as landlords won’t have ever increasing mortgage repayments driven by higher interest rates. “Whilst charging interest on funding has a long history and its creation can be traced back to ancient civilisations, it is increasingly out of step with how people want to interact with finance and is not how high-cost assets, such as property, will be funded moving forward,” Stevens said.

He said there was no need for a traditional mortgage from the home owner’s point of view. “We take a mortgage to secure the interest of all the brix holders,” Stevens said. “But a traditional mortgage with a bank – we replace that.”