Borrowers obtain pr& We are backed by bitcoin to buy real estate, combining the relatively new asset with one of the most established avenues for building wealth in America.
The Milo company assures that its 30-year US crypto mortgage with a low interest rate will allow It allows potential borrowers to pledge their bitcoin to purchase a property and qualify tofinance 100% of the purchase with no down payment required in dollars.
These mos were granted at an early access stage and are anticipated to be released. that the product is available to most applicants in early 2022.
“I think this product is really a game changer for many, many people. It fulfills many of the aspects of what this consumer wants, which is to continue to hold their bitcoin and be able to diversify and buy real estate, another fantastic wealth-creating asset,” Milo CEO Josip Rupena told Insider in an interview.
The crypto lending industry is taking shape, as the cryptocurrency market marked a remarkable year in 2021 when it skyrocketed. briefly beyond from a $3 billion valuation for the first time. Cryptocurrency-backed loans are secured loans that use bitcoin and other digital assets as collateral.
Milo said his crypto mortgage already has a “large” waiting list, highlighting the appetite among crypto investors to extend their wealth-building activities to housing as well. like his reluctance to set aside his bitcoin to fund such purchases.
It can be “very difficult for [cryptocurrency holders] to qualify for a mortgage because the existing framework with banks and other lenders does not consider such crypto wealth. What that means is that they have to look for alternative ways to buy property owned,” Rupena said. “Once they sell their bitcoin or crypto, that creates unintended consequences of having to make a profit and tax consequences,” she said.
“And at the same time, the biggest concern for them is the opportunity cost of the existence of a bitcoin and digital assets. We have seen that over time it increases and appreciates, and it has been appreciating,” he said. “It is different for someone who has cryptocurrencies than it is for someone who lives in the conventional dollarized world. They really don’t want to sell their crypto.”
If the purchase price of a property is $500,000, a potential Milo borrower would have to pledge, through a third-party custodian, at least $500,000 . Rupena said she will back to the borrower, will analyze several data points and will run due diligence on ownership, title, and all other aspects of a pending transaction.
“That bitcoin will allow us to make money. We need to feel comfortable with the consumer in order to grant that loan. At the same time, they will continue to own the bitcoin during the course of the transaction,” said Rupena. Milo aims to expand the product to allow borrowers to pledge other cryptocurrencies. Mortgage borrowers can pay monthly using crypto or fiat currency.
Like other crypto loans, the Milo Crypto Mortgage has a margin call component.
“If cryptocurrencies go down by a certain amount… they could be subject to that. But they have the opportunity to engage more to mitigate those factors,” Rupena., who said that the transactions are structured to minimize the impact of price volatility.
A licensed pawnbroker, Milo began in 2018 and is familiar with dealing with niche clients, as he has significantly focused on clients living outside of the US. because international clients who held digital assets requested such a product.
affirmed furthermore, that credit checks are part of the loan process for US domestic borrowers. “For international customers, [as] they have no credit, we have found alternative ways to underwrite their loans.” ;n no 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, with applicants from at least 63 countries. yes, he added. The crypto mortgage market could be worth tens of billions of dollars, he estimated. Rupena.
“We know that there are billions of dollars outstanding in existing loans that are backed by cryptocurrencies, because of the number of buyers out there. so “Which we think is at least a multi-million dollar opportunity, if not bigger, and could be bigger given the size of real estate as an asset,” he said.
Published by Forbes Argentina