Hey Monzonauts, It’s good to be able to finally say it. Fronted is launched.
Since i left Monzo at the end of 2019, it’s been a lot of hard work, getting regulated, building our systems, and raising money. The idea hasn’t changed though, we want to make it easier for people to move by letting people spread out the cost of their deposit, or borrow some money to cover their new deposit while they wait to get their old one back.
Here to answer any questions about it. AMA
Nice site, good design and I like the idea.
But… I understand why you do this, but I’m not a fan
Noted… We might take another look at that… I think it ended up that way because before we launched we wanted to be able to contact people once we got regulated.
[edit] thanks for the feedback, i think we’re going to fix that 
Do you not see this as a harmful business?
You’re promoting lending at a very high rate (19%) compared to standard loans to people who are clearly in a financially difficult situation and can’t afford to pay the deposit for a house upfront.
It’s somewhat unethical in my opinion.
I did actually look into the business a few days ago out of curiosity but was instantly pissed off that you wanted to do a data grab before presenting an offer…
Agree - I tried to get a quote but quit because of that. [Though I don’t need the service].
Anything that wants my email before giving me a quote is an instant no these days.
We’re charging 12.5%. We also don’t rely completely on credit history but use openbanking based affordability. For people who don’t have cash to move we’re a lot cheaper than the overdraft (40%) or other unsecured lending (~69%) options.
Was just trying to find out what rate I got when I had to take a loan out with First Direct a year ago or so, for a similar sized amount (£1,000). I’m not absolutely certain but I think that was 19/20%.
So this doesn’t immediately strike me as outrageous. And as writing, I see they’re charging 12.5%.
Given the other options as a young renter/student are being lucky enough that your parents can lend you a hefty sum, or hope your friends can, I think there’s scope for this being helpful to quite a lot of people?
I haven’t built a quote, but the home page says 12.5% APR? Does it give a different rate when you do a quote?
Looking at MSE for Loans, I can see rates between 9.9% - 12.5% for up to £2K - so doesn’t seem terrible, but I can’t see the need for this over a normal loan in that case. Is it that eligibility criteria is softer here?
Apologies - I may have just recalled it wrong.
12.5% isn’t that bad. You can do better but it’s certainly not outrageous.
I’m sure to come people this will be a lifeline, but it’s still preying on those in need a little.
If it’s going to take off though I think it’ll be imperative to have this sold in partnerships through agents and landlords. I doubt there’s a significant amount of people who would seek such a service.
We offer the same fixed 12.5% APR to everyone (if they meet our lending criteria, which is to avoid lending to people who can’t afford the repayments)
People who can borrow more cheaply than 12.5% with no early repayment fees, are usually home-owners with very extensive credit history and not who we’re setup to help.
Congratulations on the launch.
Actively avoid companies who do a data grab though.
Personally, I think it’s time to ban deposits altogether and make landlords take out insurance instead. Of course, it would still be reflected ultimately in rent, but not concentrated at the start of a tenancy and not practically inconvenient to tenants in the way deposits are currently.
The irony is that it would also be better for landlords overall, as there would be a lower hurdle for tenants to move - hopefully driving up competition too… Many landlords would probably just self-insure for the month or two of rent. They can still come after you for damage etc anyway, after all.
We’ve managed to ban letting fees. Why not deposits?
Until loads of tenants rip the place apart and walk away, resulting in the landlord’s insurance going up and loss of no claims.
Insurance products exist, like Flatfair, Zerodeposit, OME and Canopy… They’re much more expensive, and if a landlord does decide to pursue the tenant for damages, they only protect the landlord.
The cash deposit system doesn’t create this “moral hazard” (that a tenant can just trash the place and walk away)… so ends up much cheaper.
It depends how the system is set up. A tenant could be registered with the insurer at the start of the tenancy and any claims by the landlord could be pursued by the insurer against the tenant. Not dissimilar to motor insurance.
Tenant insurance is not a bad idea either
As it currently stands, yes. It would need some well written legislation to make it really work effectively
No disagreement with the rest of what you’ve said.
But if it’s a downside that insurance only protects the landlord, then surely a deposit does the exact same thing.
I’ve never had any protection as a renter by way of giving up a huge sum of money. Recently went through a dispute with TDS, and the whole process (while ultimately most successful for us), was so long and full of hassle.
I concur with that completely. When we bought our house last year, the landlord of our rental property before tried to fleece us for just over a grand, ultimately we came off better and only lost £86(of which i still believe we should’ve got back) but my god was it was of the most needlessly long processes i’ve ever been involved in, and the time and hassle that it takes causes so much stress, especially when it’s over large sums of money.
I’m very lucky in that my work will cover a deposit loan over 12 months pay interest free, however this kind of service is highly required for a lot of people, particularly in places like london.
The ability to just get up to 5 weeks rent in a city where a room is on average £611 a month or £1,225 a month for your own one bedroom flat is out of reach for many.
Plus there is usually a month up front cost in addition.
And you don’t usually have the deposits from your previous place refunded by this point.
I don’t think everyone unable to afford this immediately up front is vulnerable in any way. It can happy to lots on fairly good incomes.