Can your everyday spending – and that of family members and friends – potentially help you cobble together a home deposit faster?
That’s the aim of Homewards, a new app launched by entrepreneurs Freddie Altman and Benjamin Milsom, which rewards users with cashback from regular credit and debit card use, and others who can link to it.
Many would-be first-time buyers struggle to get onto the property ladder, with a large stumbling block being large deposits that are needed.
Banks typically ask for a 10 per cent deposit from first-time buyers – and that can be a difficult chunk of cash to save.
Homewards.io has been founded by Freddie Altman (right) and Benjamin Milsom (left) with backing provided by talent investor, Entrepreneur First
Freddie told This is Money that he’s hoping to change that through this new app. He says: ‘We wanted to give people benefits to what they are already doing in their day to day lives.’
Homewards.io is currently in the pre-launch phase, which means that consumers are only able to signal their interest by signing up with their email addresses.
Homewards then responds with a welcome email explaining that people in groups will get priority access upon launch.
It includes a special referral link so that customers can invite parents, grandparents and partners to their group to essentially pool the cashback and help the pot grow faster.
The pair have plans to launch the app before the end of the year and for now are making adjustments to the service based on customer and market feedback.
Freddie explains: ‘We are currently accepting names on the waiting-list. We want to design the product with them and engage with them.
‘We’ve been up and running for a month and we’re getting a lot of good feedback.’
‘A further excellent development is that we will have access to over 4,000 retailers from day one now.
‘While covering mainly online to start with, we should have access to a range of offline retailers as part of that number too.’
Among the names mentioned on the website are Amazon, Booking.com, Holland and Barrett, and Waitrose.
Homewards also plans on adding independent retailers to the list. Freddie says: ‘We will be covering both online and offline from day one across the UK.
‘In London, we’ll have a range of local independent retailers on board too (not just nationwide chains) – expanding to other UK cities over time.’
The more the merrier: If you get more people linking their cards to your profile you’ll be able to earn more cashback rewards and accumulate your deposit
Signing up to Homewards will enable you to collect cashback towards your deposit which will be saved into a Lifetime Isa – this allows a maximum of £4,000 to enter per year, in which the Government then tops up with a 25 per cent bonus.
Sign-up is free and you can also get your partner, friends and family members to contribute to your Lisa by asking them to link bank cards (credit and debit) as well and allocate the money to you.
There isn’t a limit to the number of people you can associate with your profile.
Freddie says: ‘It all comes down to how many people you can convince to pool their cashback together with you (likely being your immediate family).
‘Conversely, individuals supporting primary savers can also split their cashback between them.
‘People may have reservations about linking cards and we know there have been breaches by others in the past. But we want to stress that we can’t see anything that you do besides what you do with our partners.
‘For example, a parent has two kids saving for a deposit – each has their own Lifetime Isa – so the parent can allocate to split their cashback.’
The service will be free to all users and there will be no need for coupons, QR codes or receipt scanning.
Freddie also reassures that signing up to Homewards won’t conflict with any other reward schemes you’ve signed up to like Avios, for example.
To encourage people to sign up in groups, Homewards has initiated a competition where one subscriber can win £1,000.
Users will have a choice of providing details of their Lifetime Isa where the cashback will flow in but Homewards will also provide recommendations for customers that haven’t invested in one yet.
When asked which Lifetime Isa providers he’s partnered with, Freddie declines to offer any names.
He says: ‘All the cash will be bound by the Lifetime Isa rules. We are in discussion with Lifetime Isa providers and want to give people maximum flexibility in terms of choosing stocks and shares and cash Lifetime Isa.
‘We want integration and to ensure it’s easy but if you have a Lifetime Isa already we can hook up to that.’
Homewards is an app that will allow you to save money towards buying your home. It will put cash back rewards into your chosen Lifetime ISA based on the amount you spent with its retail partners
The cashback rewards will vary. Freddie says: ‘It will be down to the retail partners’ marketing budgets and how much they will allocate to cash rewards.’
Freddie assures that Homewards will never charge customers or share their details.
‘People may have reservations about linking cards and we know there have been breaches by others in the past.
‘But we want to stress that we can’t see anything that you do besides what you do with our partners.
‘It’s purely transactional at basket level. We will know high level details so basket amount but not what’s in that basket.
‘People should rest assured that their data is safe and not out there for us to sell data as an extra revenue stream. We will only use it to improve our service.’
The business will, for now, operate through funds provided by talent investor, Entrepreneur First (EF).
Freddie adds: ‘There’s commission from retailers but our model is to pass it back to our members.
‘We aim to give as much as possible. We are not looking to make revenue off our members and we’re in it for the long game.
‘Aspiring first time buyers are really just navigating this for the first time and it’s very arduous with a lot of pitfalls.
‘Whether it be information or access to relevant angles – right now our focus is just to provide as much value for them as we can.’
However, he doesn’t rule out getting funds in the future from other sources.
He adds: ‘We will be getting further investment.
‘We don’t want to limit our options or say what our options are but crowdfunding is very interesting to us and it’s doing a social good.
‘We want people to believe in us and the mission statements. We do have good relationships with investors and venture capitalists.’
Freddie explains the reason behind the unusual domain name: ‘We’re a tech company and .io is pretty common for tech companies today
‘The .com is practically unavailable. We also have .co.uk but prefer to use the .io.’
Freddie left what he refers to as a ‘good job’ at Deloite Digital where he worked as a product and services designer for about a year.
He encourages other would-be entrepreneurs to take the plunge if they desire more of a challenge.
He says: ‘The one thing I don’t want is to live with regrets. I had a good job before and was challenged but there was a need to meet that entrepreneurial side of me.
‘Taking on risk with no structure can be daunting but there is so much support out there from the likes of EF and loads of investors even from an idea stage.
‘There is lots of safety nets out there so if the timing is right for you then go and try it out.’
Podcast: How to invest and save for your child
Ben from Homewards contacted This is Money after listening to the below podcast about saving for children.
It might not be on the top of your to-do list when you have a child, but investing and saving for them to build a tidy nest egg for when they reach adulthood is best done sooner rather than later.
In this episode of the This is Money podcast, editor Simon Lambert, assistant editor (and new parent) Lee Boyce look at the best ways to save for your children.
We discuss investment options, Junior Isas, a pension and other ways, and why ‘the hardest step is the first, but it is also the most powerful’.
Lee has a target of a £50,000 pot to build up for his new daughter ahead of her 18th birthday in 2036 – and discusses how he plans to achieve this, with a little help from Einstein’s eighth wonder of the world, compounding.