a16z-backed Telus wants to help people access their savings to become real estate investors

- Advertisement -

The crypto hasn’t had a good week, as bitcoin plunged below $17,000 – its lowest level in two years. Layoffs abound, the stock market continues to fall. Meanwhile, inflation recently hit a 40-year high.

- Advertisement -

For those looking for a safe place to park their cash and actually earn interest on their savings just above the national average APY of 0.20%, the options aren’t exactly plentiful.

- Advertisement -

Enter Telus. The six-year-old fintech startup claims it can offer people a yield of 3.85% to 4.5% on their savings balances by using the money to fund some US single-family-home loans.

With mortgage interest rates more than doubling from a year ago, one might think that this is not the best time to become a digital mortgage lender.

- Advertisement -

But co-founder Rocky Lee believes his company’s unique business model sets it apart from other lenders in the region.

For one, the company has a very exclusive offering. It targets existing homeowners who want to upgrade to larger homes without having to sell their homes, making it difficult for them to get approved for a loan by traditional mortgage lenders.

If this sounds complicated, well, it is.

Lee breaks it down like this: “The house they’re in” [Tellus’ borrowers] Buy is not usually a starter home. What they are asking for is called a Super Jumbo Loan, which is designed for people who don’t really have a ready to use mortgage solution. And we provide that solution for those categories of people.”

So where does the savings share come from?

TELUS interest rates are typically two basis points higher than standard-compliant mortgages. For example, in today’s market if the loan rate is 7%, Telus will charge 9%—a premium because it claims it is able to lend money to American single-family-home borrowers “in major cities”. is offering to get such loans which otherwise would not be able to. Because it’s using its retail customers’ savings deposits to pay off these loans at a 3.85% to 4.5% yield, Telus is paying its money back in interest, which is similar to what it’s charging its borrowers. Builds on diffusion.

Its retail customers are able to earn interest on a daily basis, while getting help with things like budgeting funds and setting financial goals. Tellus says it promotes financial literacy, for example, by questioning users on financial terms and then rewarding them with higher interest rates. At the same time, the company says it is enabling these consumers to invest in real estate in a way that they would not otherwise be able to, while having the ability to withdraw their money at any time.

While its strategy may sound risky, Lee told TechCrunch that Telus uses “very strict underwriting criteria” and has not yet seen any defaults because most of its borrowers refinance their loans on more favorable terms soon after. go away.

Since its 2016 inception, Telus has provided over $80 million in loans with an average loan size of $2 million. It partners with mortgage brokers to find borrowers. And it finds its retail customers through channels like Instagram, TikTok and Google. Since the company is mobile-first, it focuses on people using smartphones. Telus allows anyone in the US to use its savings software. It only lends in California because that’s where it has a lending license and partnership.

Despite a challenging real estate market, the company says it increased its revenue by 55% in the third quarter compared to the second quarter of 2022, according to co-founder Ti Zhu. And earlier this year, it raised $16 million in a seed round of funding led by Andreessen Horowitz (a16z) and with participation from All-Stars Investments, Alumni Ventures, Descent Capital, Vector Ventures, West Arrow and Westwood Ventures. The co-founders of YouTube, Lime and Sereno Group Real Estate also participated in the financing, which followed a $10 million SAFE.

Remote-First, the Cupertino, California-based startup is emerging stealthily as it looks to build out its engineering, marketing and product teams, which number 50. It also plans to build on its recently launched new offering aimed at SMBs. ,

Source link

- Advertisement -

Recent Articles

Related Stories