Fintech startup Milo to offer 30-year ‘crypto-mortgages’ to its subscribers
A fintech company behind the first ‘crypto mortgage’ sees a multibillion-dollar market in allowing borrowers to promise their bitcoin in exchange for access to the real estate market.
It claims that their 30-year, low-interest-rate US crypto mortgage allows qualified borrowers to hold bitcoin while purchasing real estate. Loans have been made available in an early-access stage, with the product expected to be available to the majority of applicants early this year.
Milo’s plans for the crypto mortgage
Milo’s 30-year, low-interest rate US crypto mortgage will allow potential borrowers to pledge their bitcoin to acquire property and qualify for financing 100 percent of the transaction with no dollar down payments required, according to the company. Loans have been made available in an early-access stage, with the product expected to be available to the majority of applicants in early 2022.
“This device, in my opinion, is a game changer for a large number of people. It accomplishes a lot of what this customer wants, which is to keep their bitcoin and be able to diversify and buy real estate – another amazing wealth-creating asset “Josip Rupena, CEO of Milo, told Insider in an interview.
The crypto loan sector is already taking shape, as the cryptocurrency market had a memorable year in 2021, temporarily exceeding a $3 trillion valuation for the first time. Crypto-backed loans are secured loans in which bitcoin and other digital assets are used as collateral.
Milo claims to have a “huge” waitlist for its crypto mortgage, illustrating the desire among crypto investors to diversify their wealth-building activities into property as well as their unwillingness to give up their bitcoin to fund such purchases.
It is possible “It is extremely difficult for [crypto holders] to qualify for a mortgage because the present structure with banks and other lenders does not take digital wealth into account. That implies they’ll have to hunt for alternate ways to buy real estate “Rupena stated. “Once they sell their bitcoin or cryptocurrency, they are forced to realize gains and face tax repercussions,” he explained.
“At the same time, their main concern is the opportunity cost associated with the emergence of bitcoin and digital assets. We’ve observed that it grows and appreciates over time, and it has been doing so “He stated. “It’s not the same for someone who possesses cryptocurrency as it is for someone who lives in a traditional dollarized environment. They are adamantly opposed to selling their cryptocurrency.”
If the purchase price of a property is $500,000, a potential Milo borrower must pledge at least $500,000 through a third-party custodian. According to Rupena, it will underwrite the borrower, examine numerous data points, and conduct due diligence on the property, title, and all other components of a pending transaction.
“That bitcoin will allow us to gain the consumer’s trust in order to make that loan. At the same time, they will retain ownership of the bitcoin throughout the transaction “Rupena stated. Milo hopes to expand the concept so that debtors can pledge other coins. Borrowers can pay their mortgages in either crypto or fiat currency on a monthly basis.
Milo’s crypto mortgage, like other crypto loans, features a margin-call component.
“If the value of the cryptocurrency falls by a particular level, they may be affected. They do, however, have the option of pledging more in order to reduce the effects of these circumstances “Rupena stated. He stated such transactions are designed to reduce the impact of price volatility.
Milo, a licensed lender, began operations in 2018 and is well-versed in dealing with specialized clientele, having had a large concentration on clients residing outside of the United States. Rupena stated that the concept of a US crypto mortgage arose as a result of overseas consumers owning digital assets requesting such a product.
Credit checks, he noted, are part of the loan procedure for US domestic borrowers. “For international clients, [as] they don’t have credit, we have found alternative ways of underwriting without credit and then it’s just one more data point for us.”
Milo’s other mortgage products for foreign nationals have originated millions of dollars in loans, he claimed, with applicants from at least 63 nations. According to Rupena, the crypto-mortgage market might be worth tens of billions of dollars.
“By the number of buyers, we know that there are billions of dollars in outstanding loans backed by cryptocurrency. So we believe it’s a multibillion-dollar opportunity at the very least, if not larger, and it may be larger given the scale of real estate as an asset class “He stated.
