Fintech firm Carrott has expanded its micro-savings app into the home loan space to help consumers use small payments to pay off their mortgages faster.
Originally built around superannuation and assisting people when saving up for their retirement, the company decided to expand out into home loans and HECS at the beginning of November.
“Carrott’s a micro-savings platform. What we do is round up your everyday transactions from your debit card or credit card to the next dollar,” Christian Raftery, CEO of Carrott, told
Australian Broker.
The firm decided to move into debt instead of focusing solely on superannuation because customers wanted to see the micro-payments having tangible effects on their financial wellbeing in real time instead of something in the distant future, he said.
How the app currently works is small payments are made until they accumulate to $5. They will then be debited from the individual’s account and later deposited as specified into a particular home loan, super fund or HECS debt at the end of the month.
The app itself is aimed at those who want to put a little bit extra aside each month to pay off their home loans but who don’t have the time to do this, he said.
“They want to find that extra way to pay it down a little bit quicker, having an impact on their lifestyle. That’s the whole theme throughout Carrott. We want to help stop lazy cash but we also want to be a financial wellness company that looks after you and helps you build your financial future.”
Raftery said that brokers should recommend the app to their clients because it shows an interest in the customer’s wellbeing.
As some broker clients may not be ready to take out a home loan, Carrott can help them transition to a more prepared stage by helping them get rid of debt such as HECS faster. Those who get approved for a loan will also have access to the mortgage feature of the app so they can pay off their debt even faster, he said.
“For the broker, this shows that they’re committed to their client and they want to help them. It builds up rapport.”
This could positively affect repeat business when customers come back and refinance in the future, he added.
While Carrott cannot legally implement a referral scheme and remuneration at present, Raftery said the firm will be looking into this especially if it can gain an AFS licence in the future.
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