Stepladder reviews?

lwhiteman88

I came across a sponsored add on FB the other day and was intrigued as what it was offering, on the face of it, seemed like a good idea.
I don't have any intention of using it as I am already close to having my deposit but I thought it would be useful to get a discussion started as to whether it is a good idea or not as I am sure there will be some people looking for reviews and maybe signing up. I couldn't see any reviews online which is why I thought to post here.

My initial thought is that if you are given your deposit earlier than your target date then surely you're still committed to continue contributing until you have covered the amount of your deposit. Therefore surely lenders would just see this as a loan?

Apologies if this sort of scheme has been discussed before but it's the first time I have seen a 'peer to peer' lending focused on home buyers.

Obviously googling 'stepladder' brings up stepladders. Try adding deposit

eddddy

As you say, it's clearly p2p lending. Their website says say...

So, that month the member credited the property deposit becomes a borrower from every other member of the circle, and every other member becomes a lender to that borrower.

Link: https://joinstepladder.com/how-it-works.php#faq-row

So you would have a loaned deposit - which would not be acceptable to most lenders.

And 'loan repayments' continue immediately after you borrow the money - which would impact your affordability calculation done by your lender.

But it's hard to believe that they made such a basic 'schoolboy error' - so maybe there's more to it.


Edit to add...

They don't yet have FCA authorisation, so are not doing any business - so there won't be any reviews yet.

eddddy

lwhiteman88 wrote: »

Obviously googling 'stepladder' brings up stepladders. Try adding deposit

And talking of 'school boy errors' - what kind of a dope sets up a new online business with a name that causes such an obvious clash in Google?

lwhiteman88

eddddy wrote: »

As you say, it's clearly p2p lending. Their website says say...


They don't yet have FCA authorisation, so are not doing any business - so there won't be any reviews yet.

I am quite surprised that they are advertising without this. Maybe to gauge the response they get.

I was just slightly concerned that there will be a lot of people out there who could buy into this without really considering the repercussions. There is no mention (from what I could see) advising that this could affect affordability. Most people would know that it would but there will be people that wont.

They also charge 5% administration fee which is quite a chunk from someones deposit.

AdrianC

eddddy wrote: »

As you say, it's clearly p2p lending. Their website says say...

So, that month the member credited the property deposit becomes a borrower from every other member of the circle, and every other member becomes a lender to that borrower.

Sounds more like a pyramid scheme...

But I'd definitely agree about the loaned deposit. It'll never work.

AdrianC

eddddy wrote: »

And talking of 'school boy errors' - what kind of a dope sets up a new online business with a name that causes such an obvious clash in Google?

It's a difficult one. Either you have a dictionary word - which is memorable, but far from unique - or you have a dropped-scrabble-set made-up word - which is unmemorable.

lwhiteman88

I thought I would give a quick update. I decided to comment on the FB post just to say how it could affect peoples affordability when applying for a mortgage. I received a response so I thought I would post it.

StepLadder might not be for everyone. We certainly appreciate the opportunity to address the concern raised.

For those who are #tiredofrenting, the opportunity to have a property deposit sooner, in most cases significantly sooner, is worth exploring. StepLadder is a peer-to-peer model where you and the other members of your circle are collaborating to form your own property deposit capital with StepLadder as a matching, administration, and support platform.

The partner lenders and mortgage brokers we continue talking-to have spent time to review and analyse StepLadder and have considered carefully the source of deposit. Privately, a number have even expressed enthusiasm that the relationship built among members of a circle paired with StepLadder's on-going role can yield a superior profile for lending to first time buyers than the market average.

As far as credit impact, StepLadder has worked closely with our commercial partners and Equifax, one of the UK's leading credit bureaus. The fixed monthly commitment itself does not adversely impact a member's credit. This is because members may need to drop out before being allocated the property deposit, thereby foregoing the lump sum and instead receiving their original paid-in principal at the end of term, less any applicable fees.

Joining StepLadder does entail a commitment to a set term (some circles are planned for ten months, others up to several years) of fixed monthly contributions. These are based on member's target property deposit amount and budget. As far as affordability is concerned, at the on-boarding stage, we verify every member’s identity, perform a creditworthiness assessment, and evaluate affordability in terms of the member’s disposable income. All member-provided details are verified using the processes familiar to a bank or mortgage broker.

Once a member has received their property deposit via StepLadder, it is theirs to use exclusively for buying a home. There are no extra payments to make beyond the fixed monthly contributions and pre-advised fees, from circle launch to end

I think they have avoided my point and I am obviously still not convinced this could ever help someone applying for a mortgage.