The long story
1. Finance is provided
Pfida provides the amount of finance you need in order to purchase a property – this is capped at £400,000 at the moment. We recommend providing 20% as your initial equity (aka deposit amount!) but we do accept as little as 15% on a case-by-case basis. The maximum property value we currently finance is £500,000.
2. Pay rent for our share of the property
Our co-ownership model helps you purchase 100% of the property in your own time. We provide a leasehold agreement on our share of the property, which gives you the right to live in the property in exchange for rent. Your rent is based on several factors (but not interest!) and is reviewed on an annual basis. To keep things fair and affordable, we will only ever change your rental rate by 5% max. This means, based on how our model works, the rental rate can also go downwards – something that wouldn’t happen in a traditional landlord-renter situation. It’s good to remember too, the amount of rent will also decrease as you purchase equity from us.
You can opt to only pay rent at any time since our product is completely debt-free.
3. Purchase equity when you want
To help you meet your goal of owning the property, we set up a recommended finance agreement illustrating a target monthly payment amount that will enable you to buy the remaining equity shares from us over a desired timeframe – the equity is sold to you at the original cost.
Your monthly equity payments are optional and flexible. You can choose to purchase equity if and when you want and can change the monthly amount to suit you through your account dashboard.
There’s no obligation to purchase equity, you are free to pay rent only for as long as choose.
4. Get rewarded with rental discounts for purchasing equity
In the finance agreement, we create a ‘target payment’ for you. This is the ideal calculation of rent plus equity payment for you to own your home during your desired timeframe. Find out more.
By sticking to this target amount, you will receive a rental discount of typically at least 5% and up to a maximum of 50% as a reward for meeting your goals. We let you know the exact percentage relevant to your property at the start of our agreement. The discounted amount is then added to your equity each month to help you own your home sooner.
To make it even better, you can edit and reset your target amount every three months using your account dashboard. Our tech works out the calculations for you, and you get the choice to say whether you want your term length to change or your monthly rent amount to change.
This is definitely one of our fave features – it gives you the flexibility to change your agreement anytime you need to. Imagine doing this with a traditional mortgage? They’d ask you to remortgage – but we won’t!
5. Fall back on your equity buffer
We’ve already mentioned this one – but it’s another Pfida fave. In the event you’re facing financial difficulty, you can sell back equity to cover your rent. We worked out that your recommended 20% initial equity share could protect you for 2-4 years if required! This gives you time to get back on your feet knowing you and your family have a roof over your head.
