A financial tech company is rolling out what it calls the world's first cryptocurrencies mortgage through which borrowers can get loans to buy real estate, combining the relatively new asset with one of the most established avenues of building wealth in America.
Milo said its 30-year, low-interest rate UScryptocurrencies mortgage will allow potential borrowers to pledge their currency to purchase property and qualify in financing 100% of the purchase with no dollar down payments required. The product will be available to most applicants in early 2022.
I think this product is a game-changer for a lot of people. Milo CEO Josip Rupena told Insider in an interview that it accomplishes a lot of the aspects of what this consumer wants, which is to just continue to hold their bitcoins and be able to buy real estate.
The market for criptoloans has begun to take shape, as the market for criptoloans briefly soared past a $3 trillion valuation for the first time in 2021. Digital assets such as bitcoins are used as security in cryptocurrencies-backed loans.
Milo said that it already has a large waitlist for its mortgage, which is indicative of the appetite among investors for housing as well as their reluctance to let go of their digital currency.
Milo is a company founded by Josip Rupena.
Milo.
It can be difficult for [crypto holders] to get a mortgage because the existing framework with banks and other lenders doesn't consider that. Rupena said that they have to look for alternative ways of buying real estate. He said that selling their digital currency creates tax consequences.
The biggest concern for them is the opportunity cost over the existence of a digital asset. He said that over time it has been appreciated. It's different for someone who has a digital currency than it is for someone who doesn't. They don't want to sell their coins.
If the purchase price of a property is $500,000, a potential Milo borrower would need to pledge $500,000 through a third-party custodian. Rupena will run due diligence on the property, title, and all other aspects of a pending transaction.
We will be able to give the loan to the consumer with the help of the digital currency. They will continue to own the currency through the transaction. Milo wants to expand the product to allow borrowers to pledge other cryptocurrencies.
Milo's mortgage has a margin-call component.
They could be subject to that if the coin goes down. Rupena said that they have the chance to pledge more to mitigate against those factors. Transactions are structured to minimize price volatility.
Milo is a licensed lender and has a focus on clients living outside of the US. Rupena said that international customers who were holding digital assets were asking for a product such as a UScryptocurrencies mortgage.
Credit checks are part of the lending process for US domestic borrowers. "For international clients, 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 have originated millions of dollars in loans with applicants from at least 63 countries.
Rupena estimated the market could be worth tens of billions of dollars.
Billions of dollars of existing loans are backed by the number of buyers out there. He said that it could be larger given the size of real estate as an asset class.
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