London-listed property fintech LendInvest confirmed the sale of a £243m buy-to-let mortgage portfolio to digital bank Chetwood Financial.
The portfolio includes mortgages originated between 1 March 2022 and 30 November 2022 during which time interest rate hikes reduced the profitability of the mortgages.
LendInvest will take a £10.5m loss on the sale which will be recognised in its 2024 results, largely offsetting a £10.8m profit booked in April from the sale of its residual interests in a bunch of securitised products.
The funds from the sale will be used to repay the facilities that financed the assets in the first place. LendInvest said this will allow the capital to be redeployed in new mortgages with stronger margins.
The sale represents another attempt to improve its fund under management and reduce the proportion of platform assets on its balance sheet. LendInvest will continue to service the portfolio.
Rod Lockhart, CEO of LendInvest, said: “This transaction demonstrates our proactive approach to capital management and supports our longer term strategy to manage an increasing proportion of platform assets for third parties. It also initiates a new partnership, adding to a growing list of global financial institutions choosing to back our mortgage products.”
The announcement comes shortly after LendInvest secured increased financing from a range of banks. Earlier this month, BNP Paribas joined a £300m funding syndicate alongside HSBC and Barclays to support LendInvest’s short term mortgage market.
In April, Wells Fargo agreed to finance LendInvest’s buy-to-let division.