How Habito are trying to make buying a house much easier

Daniel Hegarty tells Andy Martin that an entrepreneur should look for broken things to fix and so he turned his attention to the mortgage market

Daniel Hegarty, whose school report read: “Shows a complete lack of scholastic integrity” (Habito)

Where do you go when you need a mortgage? A bank or building society? Or, as nearly everyone else does, do you check online first? If you do a search, you’ll almost certainly come across Habito, voted by its customers as the Best Mortgage Broker of 2020. I tried it and it came up with three viable options after Barclays turned me down flat. And that was at the weekend. Daniel Hegarty, formerly a teenage rock star, is Habito’s founder and chief executive.

The encouraging news for high-school dropouts is that Hegarty is one. “I had to choose,” he says. “Either buckle down and do my A-levels or go on a world tour with my band.” The 16-year-old Hegarty wasn’t exactly torn. He recalls that his English teacher once wrote on his report, “shows a complete lack of scholastic integrity”. But it doesn’t seem to have done him any major harm.

He left Enfield for Los Angeles and went on to freelance as a guitarist with Robbie Williams and S Club 7 among others but after eight years on the road, he decided he needed a proper job. He says: “I was a huge geek, really. All I wanted to do was build software. Anything that didn’t involve playing guitar.” In his mid-20s he came back and went to work as a technician at Wonga, the payday loan company.

He was given an unlimited Amazon account for research and encouraged to be creative. At the same time as he was taking online courses in machine learning from Stanford University in the US he was designing the website for prospective borrowers. “It was a steep learning curve,” he says.

Hegarty got out of Wonga well before it collapsed but it was trying to buy a house in Hackney, east London, in 2014 that really concentrated his mind on mortgages. A house in London seemed like “an impossible dream” but he and his partner, a lawyer, had saved up enough for their deposit. All they needed was a decent mortgage to cover the difference. The first error his broker made was to write Hegarty’s name down twice, so the application had three names on it instead of two. After 10 days it was declined by the lender. The broker filled out the form again, this time deleting his name completely. A second refusal followed another 10 days later and, needless to say, they came under orders to exchange in a hurry.

We’ve had 20 years of incredibly cheap mortgages. At the moment we’re seeing continued house price inflation but if interest rates creep up that might tame house prices

Miraculously, despite all the glitches, Hegarty and his partner still managed to get the house in Hackney and now they have three children. But out of that mortgage-broker comedy of errors, Habito was born.

He says: “I assumed there must be some tech behind it but I soon realised it was just pieces of paper being passed around. I was completely disempowered. To be fair to him, the broker was under pressure too. It was bound to go wrong. There had to be an easier way. As an entrepreneur, you’re looking for stuff that’s broken in the world. I thought, I can fix this.”

Hegarty says that his whole mission is to make things easy, because buying a house is when you’re liable to be at your most stressed – it’s probably the biggest single investment you’ll make and then you’re confronted by endless form-filling and haggling and having to prove you are who you say you are. He says: “We’re at war with the pain of house buying.”

At the outset, Hegarty was a tech fundamentalist. “I thought the main thing was to eliminate the human factor from the process but I was wrong. House-buying is such an emotional business and it’s a big loan to do over the internet. We need a human being to provide guidance and reassurance. It’s not unreasonable to want someone there with you.”

He says Habito is 50 to 60 per cent quicker although he concedes that the stamp duty holiday on top of Covid clogged up the works. They recently introduced a new option, Habito plus, which, basically, does it all so you don’t need a solicitor nor even a surveyor.

Dan Hegarty and his family outside the house that inspired him (Mark Cocksedge)

It was the first in the UK to offer the so-called “fixed for life” mortgage, with no early repayment charges but in a recent development, Habito has become not just a broker but a lender too, so can control the whole process and without cracks to fall through.

“We didn’t think we could solve the problem any other way,” says Hegarty. Now it’s sitting on a pot of gold that borrowers can dip into. “You have to go around convincing some very smart people that you’re a suitable steward of their billions.” Fortunately enough people believed in him.

“It’s been a crazy year – everyone who was going to move moved.” Hegarty agrees trying to get on the property ladder is difficult: “We’ve had 20 years of incredibly cheap mortgages. At the moment we’re seeing continued house price inflation but if interest rates creep up that might tame house prices.”

He wisely refrains from making too many predictions: “It’s always dangerous talking about the housing market.” But he also expects to see a certain number of “regretful exiters” – those who took off for the country during the pandemic and are now tempted to return from exodus. He and his family are still happily living in Hackney.

Hegarty’s office looks more like a music studio than an office. He doesn’t have a desk and a filing cabinet, he has amplifiers and an immense ancient synthesiser. He still plays, even if the glory days of crowd surfing are over. “I spent years trying to connect with people through music,” he says. “And now I’m doing it through home ownership.”

@andymartinink