Crowdfunding was already extremely popular as a means of financing for starting entrepreneurs, but from this fall on, private individuals can also use this drug. The AFM has given mortgage lender Jungo the licenses to start providing mortgages with crowdfunding. So from now on you can gather all your friends and family to get 20% of your mortgage together.
But how does this work in his work?
It is of course not possible to get your entire mortgage together through crowdfunding. 80% of the mortgage will be a ‘normal mortgage’, for which the money will come from investors and banks. In addition, every home buyer receives a crowdfunding action, which can yield up to 20% of the mortgage.
The mortgage applications are assessed by Jungo and have a guaranteed interest rate as with any mortgage. Your family and friends can invest in your mortgage but also investors. When they invest in your mortgage, they will receive an interest rate of about 3 to 3.5 percent.
What does it yield?
When family and friends or investors invest in your mortgage, they will receive a significantly higher amount of interest than when they leave their money in their savings account. The disadvantage is that the investors are the first to be the only ones when you can no longer pay your mortgage. Because the bank is no longer the only investor, they take less of a risk and can lower the interest on your mortgage. The remaining risk will then end up with your investors. This gives the crowdfunders a higher return and you pay less interest on balance.
However, the risk of crowdfunders is minimized by Jungo. There will be built up a guarantee capital from which the risk can be paid out if you can no longer pay your mortgage. This minimizes the risk for your crowdfunders.
What are the expectations?
Jungo expects mortgages with crowdfunding will not run a storm. Often family and friends are reluctant and prefer to keep business and personal investments separate. Against this, investors will be less reticent because they receive high interest rates and a limited risk. Investors are generally familiar with the risk of investing, are further away from the situation and will therefore invest faster in such a crowfunding campaign.
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