Government-Backed My Home Finance Scheme Comes to an End
My Home Finance has closed down its doors. MHF was founded in 2010 by the National Housing Federation that is a trade association for member social housing providers in England. Funding for the venture was provided by the Department of Work and Pensions (DWP), many social landlords and Wates Giving. They had 27 locations (assigned within existing housing associations). This was a surprising closure to hear about. They had been the dominant force in the instalment sector offering the cheapest pricing at 3 and 6 months. Their competitive £300 charges calculated as just £42.13 (3) and £64.76 (6). This scheme was championed by Iain Duncan Smith as a great way to beat the loan sharks and doorstep lenders.
There was ambitious plans for expansion and things did look promising. At the beginning of 2016 it was referenced on the site that they had processed 25,000 loans. Things soon turned sour though in March when an article was posted by The Guardian that expressed concerns regarding a potential collapse, leaving housing associations out of pocket to the tune of £3.5m. Other than this, the closure came with little warning, with the www.myhomefinance.org.uk site quickly being taken down. There was always a chance that this service could struggle to attract customers in high numbers. One big issue was that they required all potential borrowers to head into a branch to apply in person taking in various documents.
The branches were not open at weekends and those that did pop in had to pay an admin fee upfront. Only as much as £500 could be accessed, although they did hand a full year to repay. It would have been beneficial to see account servicing provided. Without this, it was a case of again either phoning or visiting them to make changes. It was the low pricing that really helped this service to stand out. However, customers that opted to repay over the complete year may have been unaware that there were cheaper subprime alternatives online. As an example, they charged £183.35 per £500 over a year. This would double up as £366.70 if £1000 was available.
In comparison, Likely Loans asks for just £228.32. Most guarantor lenders also charge around the £230/£240 mark. It would so appear that the team behind My Home Finance underestimated the competition across the market. Many of which are more tech focussed, that enables the lending process to be completed swiftly online. It was the big doorstep lenders that were originally seen as their main competition. The market leader (Provident) has been doing this for a long time though and surely it is more attractive for agents to come to your home, rather than you having to head to a designated housing association. MHF joins the ever expanding list of closures that recently took on BongaLoans, Reddies and SafeLoans.