Blurb from the author: I wouldn't say I'm hurrying to buy a house soon, but I'd like to have a serious conversation about it when I'm around 27 or 28. But even then, I'm not sure whether or not it would be a financially sound decision to actually buy a house, or whether I should start renting instead.
To reduce this form of financial burden, HomeCrowd was founded.
It is a peer-to-peer lending platform (P2P) that connects those looking for a home with lenders willing to fund this initiative out of interest.
According to their website, it is also the first P2P lending for a mortgage and consumer finance platform that is pending a license from the Ministry of Housing and Local Government.
Editor's update: The information in the paragraph above has been updated to reflect a better accuracy of the statement.
So who exactly is your target market, you ask? Middle-income millennials, especially if they are home buyers for the first time.
“Because of the higher real estate market risk in these few years, traditional banks are becoming very selective in approving home loans to borrowers. Without middle-income millennials, ”Dave Chew, founder of HomeCrowd, told Vulcan Post.
At a time when the cost of living was higher, Dave told us that he had seen many millennials using additional jobs to make a living, especially from the gig economy.
But even with that it's not enough.
"Many of them complained that their loan application was not approved, even though they are able to service mortgage rates that combine their primary and secondary income," said Dave.
For this reason, HomeCrowd focused on ensuring that this group of people was no longer excluded from finding their own home.
Keep funny business outside
Though Dave is a P2P crowdlending platform designed to serve people better than banks, he told us that HomeCrowd is still strictly performing their background checks.
"It's not easy for us to take credit risk. We will check borrowers' creditworthiness by checking all sources of income and current debt before they can qualify for crowdfunding campaigns," he said.
Your review process is also supported by Experian
Check the borrowers' credit scores.
But even if the team finds out that a certain person doesn't
qualify, they refrain from rejecting them like a traditional bank
would you.
HomeCrowd is still talking to them about ways to improve their credit rating so they can one day qualify for home loans.
Some of her team members during the Chinaccelerator Batch 16 Demo Day in November 2019 / Photo credit: HomeCrowd
Perhaps my biggest question was awareness, or should I say that lenders are likely to come to HomeCrowd to lend money to strangers.
Yes, P2P platforms exist and are widely used in Malaysia. However, this is different when you consider borrowers that may have been rejected by banks due to poor creditworthiness or the like.
“For lenders, we promote a fixed return as the loan is
secured from the property, ”said Dave.
However, if everything else fails and the borrower does not pay, two additional steps are considered, which are either restructuring the loan or a separate donation crowdfunding campaign (legitimate cases in which unexpected medical bills arise, etc.).
If this doesn't work, both legal action and property foreclosure
is taken into account. When the property is auctioned, all the money
Contributions are returned to the lender.
Nobody left behind
When it comes to finding lenders, HomeCrowd works with institutional investors and other partners to ensure that the relationship between the borrowers does not overshadow the parties willing to lend.
Editor's update: The information in the paragraph above has been updated to reflect a better accuracy of the statement.
The team works hard / Image Credit: HomeCrowd
"Of course the maximum price for real estate must be 500,000 RM (from
which is 90% of the acceptable funding amount RM450k), the set by threshold
the Malaysian government for affordable household prices, ”Dave continued.
Lenders have the flexibility to choose based on their desired interest rates, the summary of property information, and the borrower's personal profile.
All of this is done by HomeCrowd generating an interest margin of 0.5% from transactions between borrowers and lenders.
“Since this is also an investment with social implications, we will send
The lender community regularly provides information about developments in the millennia
Life, ”Dave said to us.
"In the long term, we will look at stocks and rental products that will help young home buyers," he said.
Bottom line: It's too early for me to look at home loans, but I think HomeCrowd does a good thing. If for some reason I am unable to qualify for a traditional bank home loan, it is nice to know that I may still be able to own property without having to rent my whole life.
- Read more about other Malaysian startups we've written about here.
Selected image source: HomeCrowd
