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Historically, acquiring a home through financing has been a complex process worldwide. However, in the last few decades in the United States, this process has shifted towards greater transparency and digitalization. Companies like Rocket Mortgage, Better.com, and Loan Depot have leveraged this trend to enhance the accessibility and efficiency of obtaining home mortgages.
This modernization and streamlining of the home financing process have now started to take hold in Mexico as well.
Enter Kredi. Kredi's mission is simple.
To make applying and obtaining a mortgage easier and more equitable for people in Latin America.
The founders of Kredi understood the struggles firsthand. They had all dealt with the complex system, the endless paperwork, and the feeling of being shut out of their dream of homeownership. So, they decided to build Kredi to change things.
“We started with Kredi when the world was starting to paralyze and “uncertainty” (Covid 19 pandemic) was the word on everyone’s lips. However, despite all that, we decided to continue with the creation of a marketplace specifically designed for mortgage loans, which allowed people to get the best credit possible,” Javier Aldape told Forbes Mexico.
The Challenge
In Mexico, the mortgage market is controlled by a group of 3 to 5 institutions that originate the majority of residential mortgages. This concentration of market power results in minimal incentive to innovate or modernize the lending process and criteria. As a result, customers often face a lack of transparency during the mortgage application process, leaving them unclear on the qualifications needed or the reasons for mortgage financing denial. Furthermore, the absence of a loan guarantor similar to "Fannie Mae" in the United States makes it challenging for new entrants to penetrate the market, solidifying the established positions of current market leaders.
The Solution
Kredi's platform allows borrowers to compare offers from multiple lenders and to apply for a mortgage online. The company's platform helps to streamline the origination process, which can take up to 14 weeks with traditional banks. Kredi has been able to reduce the origination time to 3 weeks, with that goal to eventually reduce it to 1 week.
“Contrary to traditional banks, in Kredi customers can easily apply only and secure a mortgage rate in minutes. We use advanced underwriting models that allow us to seed the process and mitigate risk.” - Javier Aldape
Founders
How does Kredi work?
Kredi makes buying a home fast and simple! Here's how it works:
- Fill out a quick online form: It only takes a few minutes, and you'll need your ID, proof of address, and income documents.
- Get a personalized offer: A dedicated Kredi expert will guide you through the process and recommend the best loan for your needs.
- Three steps to your new home:
- Pre-qualification: Receive initial approval in just 5 minutes!
- Document collection: Gather pay stubs, ID, and proof of address.
- Loan decision: Get an authorization within 24 hours.
- Property valuation and deeds: Kredi will handle these important steps for you.
- Sign the papers: The finalizing process takes about two weeks and only requires one visit to the notary.
Kredi offers loans up to 90% of the property value with competitive interest rates starting at 10.53%.
Kredi Products
- Home Purchase Mortgage: This loan is ideal for those looking to buy a new home. It has payment terms of up to 30 years, flexible requirements, and the ability to add a friend, partner, or family member to the loan.
Kredi Advantages
- 100% digital company, which means you can apply for and manage your loan online.
- It is regulated and supervised, so you can be sure that your information is safe.
- It has a team of trained and specialized mortgage experts who can help you find the right loan for your needs.
- It offers a flexible approach to credit bureau and income verification, which can make it easier to qualify for a loan.
- It can get you authorized for a loan in as little as 24 hours.
- It offers interest rates as low as 10.53%.
- It has loan terms of 5 to 30 years.
- It has a 100% digital process, which means you can do everything online.
Traction
Since inception, Kredi has received over 30,000 home mortgage applications and has originated over $30mm dollars of loans across 23 states in Mexico.
In 2023, Kredi grew 9x YOY in mortgage origination volume.
Funding
Kredi has raised a total of $8M.
2022, $4.5M (Seed) led by Malek Capital and Amplo including Soma Capital.
2021, $3.1M (Seed) led by Amplo including Soma Capital, Liquid 2 Ventures, Harvard Management Company, Emles Ventures Partners, Acacia Venture Capital Partners.
2021, $125K (Seed) led by Y Combinator including Goodwater Capital and Four Cities Capital.
Market Opportunity
Kredi has a significant market opportunity in Latin America, particularly in Mexico where the mortgage market is underserved and ripe for disruption.
Here are some of the key factors that contribute to this opportunity:
- Large and Growing Mortgage Market: The Latin American mortgage market is expected to reach $720 billion by 2025, with Mexico accounting for a significant portion of this growth. This growth is driven by a number of factors, including rising urbanization, increasing incomes, and a growing middle class.
- Low loan-to-value ratio: The average loan-to-value ratio (LTV) in Latin America is around 70%, which is lower than in most developed countries. Kredi can offer innovative solutions to increase LTVs for qualified borrowers, making homeownership more attainable.
Advice to Aspiring Entrepreneurs
"Do things that don’t scale"- Paul Graham, Founder of Y Combinator
