Habito, an app that helps you find the right mortgage, raises £18.5M Series B led by Atomico

Habito, a London startup that is bringing the entire mortgage process online, has raised £18.5 million in Series B funding. Atomico, the European VC firm founded by Skype’s Niklas Zennström, led the round, with participation from existing investors Ribbit Capital, Mosaic Ventures, and Revolutionary (Ad)Ventures. It brings the total raised by the U.K. company to just over £27 million.

More interestingly, Habito, which probably counts Trussle as its closest direct competitor, says the new capital will in part be used to integrate its technology with major retail banks and high street lenders to facilitate “real-time mortgage approvals”, in addition to marketing and other product development. The startup says it also plans to expand its offering to other parts of the mortgage process, namely home and life insurance.

Calling itself a “digital mortgage broker,” Habito was founded by Daniel Hegarty, who was previously an early employee at Wonga, to remove a lot of the friction when applying for a mortgage. The company’s tech claims to analyse over 11,000 mortgage products across 70
lenders in real-time, to help identify the most suitable mortgage based on your individual circumstances. The entire application process can then be completed via the Habito app/website for free, thus eliminating the fees that most traditional mortgage brokers charge.

There is, however, an additional aspect to the Habito premise, and one that has the potential to be quite disruptive beyond pricing. Once you’ve signed up to the app and entered all of the required details related to your eligibility and your current mortgage and property (if you have one), the startup will effectively become your broker going forward.

This sees its tech continually monitor the mortgage products available on the market and alert you if it thinks you have become mismatched and therefore are paying over the odds. The idea is to make switching also as frictionless as possible. That’s because, says Habito, 1 in 4 British homeowners are currently mismatched, paying lenders an average of around £4,000 more than they need to every year.

“Fintech companies are tackling a lot of traditional areas that are ready for a new approach. This is one of them,” Atomico Partner Niall Wass tells TechCrunch. “Matching borrowers and lenders in the residential mortgage space is slow, expensive and very fragmented – with around 15,000 largely offline brokers in the U.K. But the potential is not just in the U.K., it’s across multiple markets with the same problem.”

However, despite describing the Habito value proposition for both borrowers and lenders as being pretty clear, Wass says one challenge the startup faces is the degree of apathy by house owners when it comes to remortgaging.

“This apathy is why there is such massive overspend in this market globally – perhaps because the process to move to a better mortgage has been so slow and complicated. So the first challenge is continuing to make the process simple, speedy, free and with a better outcome for the borrower. This is absolutely key,” he says.

“I love the idea that Habito has your back and will check the market automatically for a better deal for you – but that kind of message has to get out, so the next challenge is to help build the brand”.

In addition, the Atomico VC says that Habito will need to further prove the benefits to lenders too by using more technology to make it easier and cheaper to “assess the customer risk and matching them to the most appropriate product”. Hence plans to integrate with major retail banks and high street lenders at the technology level.