Digital mortgage lender Better announced Monday that the company is making its first expansion overseas with the acquisition of Trussle, a U.K.-based digital mortgage and insurance broker backed by Goldman Sachs and Finch Capital, among others.
The deal values Trussle at roughly $9 million, according to people familiar with the matter.
“Better and Trussle were both founded on the understanding that consumers increasingly prefer to use online services to shop for and transact on major life purchases,” Trussle CEO Ian Larkin said in a press release announcing the deal.
Trussle was founded in 2015.
“We are very excited about becoming part of Better, and we are confident that Trussle’s future looks brighter than ever as part of a large and growing international organization that shares our commitment to making homeownership more simple, fair and accessible for all,” Larkin said in the statement.
Amid a frenzy in pandemic-induced U.S. mortgage refinancing, Better extended nearly $25 billion in loans last year.
Better was started in 2016 by Vishal Garg, a former analyst with Morgan Stanley, after a deal to buy a house for his family fell through. An all-cash buyer was able to beat the timing of his traditional mortgage lender, and that’s when Garg figured there had to be a better way. He used the down payment he had set aside to start Better.
Goldman Sachs is among existing investors in Better.
“Better eliminates the high financing costs, massive transactional friction, tyranny and mind-numbing bureaucracy that comes with getting a mortgage and buying a home in the U.K. via a high street bank,” Garg said in the deal announcement. “We found a kindred spirit in the team at Trussle who have developed a platform that we can work alongside to help every Briton own their own home.”
The U.K.’s national homeownership rate had fallen from an all-time high of 70.9% in 2003 to 63.9% by 2018, according to the Brookings Institution.
Better’s platform moves the mortgage process completely online, giving customers the ability to upload and eSign documents, and claims to cut the closing time from an industry average of 42 days down to 21 days. Garg says that the digital-only approach is also helping to decrease bias against minorities when applying for mortgage loans. The company has previously cited a study from the National Bureau of Economic Research showing that face-to-face lenders reject minority applicants about 6% more often than comparable non-minority applicants, and also charge minority applicants more for their mortgages.
Additionally, the company not only generated $800 million in revenue last year, but also a profit — though its growth has not come without some controversy.
In May, Better announced its plans for a market debut by merging with Aurora Acquisition Corp., valuing the company, ranked No. 15 on last year’s CNBC Disruptor 50 list, at $7.7 billion. The SPAC deal includes a $1.5 billion private investment in public equity (PIPE) arrangement led by SoftBank, which invested a separate $500 million in the company just a month prior to the deal announcement. PIPEs are mechanisms for companies to raise capital from a select group of investors that make the final market debut possible.
The transaction is expected to close in the fourth quarter.