MyHomely, a German startup founded in 2020, focuses on breaking the barriers to homeownership via its unique co-investment technology. Customers achieve 100% home ownership in as little as three years while having access to digital support services and default management technology.
To date, real estate ownership has been seen as a banking product but MyHomely has changed this, carving out a specific role for insurers to play in securing the future of millennials.
Why does Germany have such low home ownership numbers?
Low ownership numbers are a natural result of the period following World War II. The production of vast government social housing along with a need for future safety lead to a “rent + invest” culture. This created a deep renting culture and built some of the largest insurance companies in the world. Very protective tenancy laws also make renting comfortable and too easy not to have to deal with long-term “boring” wealth and retirement planning.
To date, almost 50% of people in Germany do not own property, the lowest rate in Europe, excluding Switzerland. Given the sustained low interest environment, the “rent + invest” model is dead, and we believe unlocking real estate ownership for millennials is hugely important to create a financially secure future.
Many argue the future is ‘shared’ (AirBnB, ShareNow, Lime), why do you believe in home ownership rather than just renting?
There is no denying that the shared economy is exploding and drives improved efficiency and environment benefits. It is great at making commodities cheaper through shared use and that is why it works excellently for cars or holiday apartments.
However, home ownership plays two economic roles. It is both a commodity (an essential daily item) and an investment (that grows in value over time and can be financed easily with a bank). It is the second role as an investment which is not well understood in Germany. For example, if you compare renting, a version of sharing platform, to ownership. Renting is excellent when you need short term accommodation (up to 3 years) but is 100% dead money. You are trading flexibility for cash. Over a lifetime, the average millennial will waste over €1.6 million in dead rent money.
Property ownership, on the other hand, creates security by firstly locking in your monthly cost for housing – no more annual increases like rent, which this will be super important once you stop working. Secondly the “Tilgung” or repayment” portion of you monthly payment is saving not a cost – interest is the only cost portion and this is at all time lows. Lastly, by securing debt against your property, you leverage your investment returns, achieving between 10-30% returns per year and outperforming alternative investments with a similar risk profile.
More fundamentally the psychological benefits of home ownership are strong. It is well documented that home ownership creates a sense of safety, community and belonging that is connected with our ideals of family and life. The main challenge to achieving these ideals is having enough capital to acquire the property in the first place.
How do you envision helping insurance company’s policy holders with MyHomely?
Super simple, we want to pair our revolutionary MyHomely co-investment model with a standard life insurance product: we call it “Pension+”.
Our model is based on making home ownership more affordable. The customer needs less than 5% of the purchase price in savings to own more than 80% of the property, while making it super safe for customers with a clear plan to get to 100% ownership as quickly as possible, within as little as 3 years. All of this technology enables MyHomely to make home ownership a life changing event for customers.
We will enable the policyholder to secure their dream property and redirect their remaining savings income into a tax efficient pension product, leveraging the insurers’ technology. The combination is revolutionary for the market, will lead to up to three times more monthly income for customers in retirement, with significantly reduced costs, which will help prevent a wave of millennials retiring into poverty.
MyHomely is one of the 10 startups joining InsurTech Hub Munich FIN:SURE Innovation Sprint. Want to know more about their co-investment technology? Check their website and contact the team.