A Vietnamese mortgage start-up teaches lessons in innovation

Mortgages are difficult territory for start-ups to disrupt: expensive, highly regulated, and necessarily long-term; but Homebase, a Vietnamese startup is tilting at big changes to home ownership in a tough market with lessons for the rest of the world.

Why it matters

Disruption to the mortgage market is long overdue given that it is one of the few purchases left in which the buyer has to work extremely hard throughout the process. Homebase offers a possibility in which a firm can both widen accessibility and shoulder some of that hard work.

How it works

Home ownership in Vietnam stands at around 90% but younger people are struggling to join that number, according to TechCrunch, which first wrote about Homebase – not to be confused with the UK home improvement retailer.

Backed by Y-Combinator, the seed funding start-up accelerator, Homebase offers an alternative to traditional finance by effectively becoming a co-owner of the buyer’s property. The buyer may then buy equity in the form of rent payments to take full ownership of the property, or when the time comes to sell up, they are able to sell their stake.

While some countries in other parts of the world might offer government or housing-association-backed schemes that operate in a similar way, the company’s opportunity in the south east Asian country was the lack of any formal support. It’s here that the founders see their expansion opportunity, as prospective buyers in Singapore, Thailand, and Indonesia also face a lack of options.

Details

• The service is open even to Vietnam’s high proportion of ‘unbanked’ people who do not have a bank account and, therefore, no credit history.
• This means that one of its key innovations is in the onboarding and internal checks process, with an important valuations business which provides assurance to buyers.
• Meanwhile, for the financial institutions and housing developers on the other side of its platform it offers a source of new buyers.

Sourced from TechCrunch, Inc.