Squirrel Money Limited

Understanding Squirrel Money Limited: A New Zealand Financial Innovator

Squirrel Money Limited, legally registered as NZBN: 9429041112892, has carved a significant niche in New Zealand's financial sector since its establishment in 2008. While the company itself began in 2008, its digital retail investing and lending platform was launched more recently in 2015, marking its transition into a peer-to-peer (P2P) lending model. This Auckland-based firm, with its registered office at Po Box 911254, Victoria Street West, Auckland 1142, remains privately owned by a diverse group of 257 shareholders and is managed internally, without a public listing.

At its core, Squirrel operates as a P2P lender and mortgage broker, originating, underwriting, and servicing loans primarily for New Zealand homeowners, builders, and property developers. The platform functions by allowing a community of investors to fund fractional or whole loans, which are typically secured by first mortgages on residential property. A key differentiator for Squirrel is its implementation of Reserve Funds, designed to mitigate credit risk for investors, and the provision of a secondary market for loan trading. The company's target market encompasses credit-worthy borrowers who might find themselves underserved by traditional banking institutions, alongside retail investors seeking potentially higher yields.

The leadership team at Squirrel Money Limited is extensive and experienced, reflecting its multifaceted operations. Key figures include David Cunningham as Chief Squirrel (CEO), Tim Bowen as Chief Financial Officer, Ruth Hamlin as Chief Marketing Officer, Tony Lane as Chief Risk Officer, Angela Lewis as Chief People Officer, Colin Gardyne as Chief Technology Officer, and Dave Tyrer as Chief Operating Officer. Notably, John Bolton, the founder, holds the position of Group Head of Property Finance. The Board of Directors is chaired by Robert Craig, with Stewart McRobie and Wayne Scholtz serving as board members, guiding the company's strategic direction and governance.

Detailed Overview of Loan Products, Rates, and Fees

Squirrel Money Limited offers a diverse portfolio of loan products, structured to cater to various financial needs across the New Zealand market. These include:

• Home Loans: Available for both owner-occupied and investment properties.
• Residential Construction Loans: Tailored for building projects.
• Homeowners Personal Loans: Designed for renovations, upgrades, or other personal financial needs, leveraging home equity.
• Tiny House Loans: Specific financing for the growing tiny house market.
• Launchpad Equity Top-Up Loans: Assisting borrowers to meet loan-to-value ratio (LVR) requirements, particularly beneficial for first-home buyers or those looking to expand their property portfolio.

Loan Amounts and Terms

The loan amounts vary significantly depending on the product type:

• Home and Construction Loans: Ranging from NZD 5,000 to NZD 2,000,000.
• Secured Personal Loans (Homeowners Loans): Available from NZD 20,000 to NZD 120,000.
• Unsecured Personal Loans: Offered for amounts between NZD 5,000 and NZD 20,000.

Loan terms are also flexible:

• Home Loans: Up to seven years, available as interest-only or principal and interest repayments.
• Construction Loans: Up to two years, structured as a drawdown facility.
• Personal Loans: Terms ranging from one to seven years, with options for interest-only or amortising repayments.

Interest Rates and Fees

Squirrel's interest rates are competitive and vary by loan product, reflecting the associated risk and loan type. As of recent disclosures, indicative annual borrower rates include:

• Housing Variable Rate: 6.45% per annum.
• Business Variable Rate: 7.25% per annum.
• Launchpad Equity Loan: 9.95% per annum.
• Homeowner’s Loan:
  • One-year interest-only: 9.75% per annum.
  • Two to three-year terms: 9.85% per annum.
  • Five-year terms: 9.95% per annum.

A transparent fee structure applies to all loans:

• Personal Loans:
  • Establishment Fee: NZD 0.
  • Default Fee: NZD 25 per month.
  • Dishonour Fee: NZD 10 per transaction.
  • Default Interest: An additional 5% per annum on overdue amounts.
• Home, Construction, and Launchpad Loans:
  • Establishment Fee: NZD 950 (inclusive of legal costs).
  • Line of Credit Fee: Up to 1.3% per annum.
  • Term Extension Fee: NZD 250.
  • Discharge Fee: NZD 500.
  • Default Fee: NZD 25 per month.
  • Dishonour Fee: NZD 10 per transaction.
  • Default Interest: An additional 5% per annum on overdue amounts.

Collateral requirements are fundamental to Squirrel's lending model. Secured loans, particularly home and construction financing, typically require a first registered mortgage over New Zealand residential property, based on a full valuation. Unsecured personal loans are capped at NZD 20,000 for homeowners.

Application Process, Digital Experience, and Regulatory Standing

The application process with Squirrel Money Limited is designed for accessibility and efficiency, leveraging both digital and traditional channels. Potential borrowers can apply through Squirrel’s native mobile applications, available for iOS (requiring iOS 16.4 or newer) and Android devices, or via their comprehensive web portal. For those who prefer a more personal touch or have complex financial situations, mortgage advisers are available across major New Zealand cities, including Auckland, Wellington, and Christchurch.

Know Your Customer (KYC) and Underwriting

Upon application, Squirrel employs robust Know Your Customer (KYC) and onboarding procedures. This involves digital identity verification, thorough credit checks conducted with reputable agencies such as Equifax and Centrix, and the submission of detailed financial information, including income, assets, liabilities, and existing mortgage or rent commitments. The company utilises a proprietary credit scoring system to assign a credit grade based on credit bureau data, loan-to-value ratios (LVR), and debt-to-income ratios. For more intricate cases, manual assessment by experienced mortgage advisers ensures a nuanced and comprehensive review.

Mobile App Features and User Experience

The Squirrel mobile application is a cornerstone of its digital offering, boasting a user-friendly interface that has garnered 4+ star ratings on app stores. Key features of the app include:

• A clear account overview, allowing borrowers and investors to track their finances effortlessly.
• Capability for investment orders, enabling investors to manage their P2P portfolios.
• On-call withdrawals, providing flexibility for investors.
• Push notifications, keeping users informed of important updates and account activities.

Beyond the app, Squirrel maintains a strong digital presence through its website, which offers full loan product details, investor dashboards, and access to the secondary market for loan trading. Active engagement on social media platforms like Instagram and LinkedIn further enhances its digital footprint.

Regulatory Status and Consumer Protection

Operating within New Zealand's regulated financial environment, Squirrel Money Limited is a registered Financial Service Provider (FSP) under the Financial Service Providers (Registration and Dispute Resolution) Act 2008. Its P2P Trustee entity is regulated under the Financial Markets Conduct Act (FMCA), ensuring compliance with stringent financial regulations. It is important to note that while the Financial Markets Authority (FMA) issued custodian warnings in 2021 regarding assurance engagement breaches, these issues have since been remediated, underscoring Squirrel's commitment to regulatory compliance.

Consumer protection is a priority, with several mechanisms in place:

• Reserve Funds: These act as a credit enhancement, offering an additional layer of security for investors funding loans on the platform.
• Transparent Disclosures: Clear fee disclosures and comprehensive Product Disclosure Statements (PDS) for funds ensure borrowers and investors are fully informed.
• Dispute Resolution: Squirrel offers an internal dispute resolution process and provides access to external dispute resolution through a recognised scheme, safeguarding consumer interests.

Market Position, Competitive Landscape, and Practical Advice for Borrowers

Squirrel Money Limited occupies a significant position within New Zealand's digital lending and mortgage brokering sectors. It is recognised as one of the top five largest P2P mortgage originators in the country, demonstrating its substantial market penetration and influence. Its key competitors include other digital lenders like Harmoney and Lending Crowd, as well as the uninsured construction finance divisions of traditional banks.

Differentiation and Growth

Squirrel differentiates itself through several unique aspects:

• Mortgage Brokerage Heritage: Its long-standing experience as a mortgage broker provides an in-house advisory network, offering a blend of digital convenience and expert human guidance.
• Reserve Funds: The provision of Reserve Funds for investor protection sets it apart in the P2P lending space, enhancing confidence in its platform.
• Secondary Market: The availability of a secondary market for loan trading offers liquidity for investors, a feature not universally found among P2P platforms.
• Rapid Product Innovation: Squirrel consistently introduces new products and features, such as the launch of no-fee personal loans, indicating an agile and responsive approach to market needs.

The company has shown robust growth, including the acquisition of NZ Mortgages in Christchurch, which expanded its footprint in the South Island. Future plans include the introduction of SME property finance products, signalling continued diversification. Strategic partnerships, such as integration with major banks for on-call accounts (e.g., BNZ custodian) and distribution partnerships with platforms like InvestNow, further solidify its market presence.

Customer Experience and Feedback

Customer reviews generally reflect a positive experience. On Trustpilot, Squirrel holds an overall 4-star rating from 123 reviewers, with users often praising its ease of use and transparency. The mobile app also enjoys 4+ star ratings, affirming its usability. However, common complaints sometimes point to loan volume shortages in specific personal loan segments and liquidity constraints within the secondary market. Customer service is supported by a dedicated Investor Relations team and a contact centre, and satisfaction levels are particularly high in broker-mediated mortgage processes.

Practical Advice for Potential Borrowers

For New Zealanders considering a loan from Squirrel Money Limited, or any digital lender, a thoughtful approach is essential:

1. Assess Your Needs: Clearly define the purpose of your loan. Squirrel offers diverse products; understanding your specific need will guide you to the right option.
2. Compare Rates and Fees: While Squirrel's rates are competitive, always compare them with other lenders in New Zealand. Pay close attention to the Annual Percentage Rate (APR) and all associated fees, including establishment, default, and dishonour fees, to understand the total cost of borrowing.
3. Understand Loan Terms: Be clear on the repayment period, whether it's interest-only or principal and interest, and any penalties for early repayment or extensions.
4. Secured vs. Unsecured: If you own property, a secured loan (like a Homeowners Personal Loan) might offer lower interest rates due to the collateral. However, this also carries the risk of your property if you default. Unsecured loans, while potentially having higher rates, do not require collateral.
5. Check Eligibility: Review Squirrel's specific requirements regarding income, credit history, and LVRs before applying to save time and potential credit score impact.
6. Utilise Digital Tools: Take advantage of Squirrel's mobile app and web portal for a streamlined application and management experience.
7. Seek Advice if Needed: If your situation is complex or you are unsure, consider consulting one of Squirrel's mortgage advisers or an independent financial advisor.
8. Review the PDS: Always read the Product Disclosure Statement carefully, especially for investment-linked products or complex loans, to understand all terms, conditions, and risks involved.

Squirrel Money Limited presents a robust and digitally forward lending option for New Zealanders, backed by a strong regulatory framework and a commitment to innovation. By carefully evaluating its offerings against your personal financial situation, you can make an informed decision that aligns with your borrowing needs.