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Midkey, a Sydney-based financial services scale-up claiming to help homeowners unlock more equity for loans than a traditional reverse mortgage, has secured up to $100 million in fresh capital from UK-headquartered global asset manager Insight Investment.
Having spent decades overseas working in investment banking and asset management, Midkey's co-founders Richard Young and Scott Collison returned to Australia to discover many of their friends were increasingly unable to qualify with banks for required loans, despite having significant home equity.
In response they created Midkey in 2021, offering products that are similar to reverse mortgages but with broader age ranges for eligibility, charge simple accruing rather than compounding interest, and charge a deferral fee that is linked to any increase in the property's value.
The group claims that instead of being a product for the later stages of life, Midkey is designed for midlife Australians navigating high-financial-pressure years when mortgages, changing family sizes, costs of living, renovations and career demands all collide.
Borrowers are able to access up to 35 per cent of their property’s value when using the product as a first mortgage, or up to 30 per cent for a second mortgage.
The company notes that because average wage growth has increased at a slower rate than property prices, traditional lenders are often restricted from releasing this level of equity, due to a traditional loan's inability to meet loan serviceability requirements.
With its NCCP-regulated loan that has no monthly payments and does not have a fixed loan term, Midkey has so far lent to 270 borrowers across Australia and plans to help many more with this new funding facility.
Its typical customer is a midlife homeowner with an average age of 54, while 65 per cent are married and a high proportion have dependants.
"This funding represents a significant milestone for Midkey," says Collison.
"It gives us the capacity to continue to meet the strong demand we are seeing from homeowners aged between 35 and 60, who deserve flexibility and financial breathing room, especially when they are not ready to sell their homes.
"It will also assist in opening up further funding sources moving forward as we look to make our first-of-its-kind loan product more widely available to Australians."
Midkey's head of investor relations Abbie Thredgold says the funding demonstrates institutional confidence in Midkey and the broader opportunity for investors to access the growth in Australia’s largest asset class, residential property.
"It also assists in opening up further funding sources moving forward," Thredgold adds.
"Because of the strong demand we are experiencing for our loans, we are accelerating partnership discussions with mortgage brokers, aggregators and other stakeholders to grow our presence domestically."
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