Decentralized mortgage market

Abstract

When taking out a mortgage from a Dutch financial institution, the financial institution will usually provide a fraction of the property value. When taking out a mortgage, it is expected that the person that is in need of a mortgage to provide a down payment for the remaining value. This means that people that need a mortgage will have to save up before they can buy a house. As saving up could be an obstacle if the required down payment is too high, crowdfunding the remaining value could be a solution. Such crowdfunding platforms already exist. In fact, they are increasing in popularity. There are a variety of crowdfunding platforms for different needs, such as for entrepreneurs seeking investments for their projects. However, there is one thing all these platforms have in common. There is always a central point of trust, resulting in unneeded costs for the users of the platform. This thesis presents the development process of researching and implementing a decentral market where mortgages can be crowdfunded. We have created a system that does not have a central point of trust, while it still connects people that need funding with investors and financial institutions. An earlier bachelor project has already implemented a decentral marketplace to trade digital currencies. At first, the idea was to reuse their implementation. However, after researching we came to the conclusion that their implementation was no use to our mortgage market. As their marketplace is specifically designed for trading digital currencies, we developed our own market. To ensure some level of trust into our market, we used a blockchain to save the agreements that are made between the users. The blockchain ensures that the agreements made cannot be changed. Therefore, when an agreement is added to the blockchain, the agreement is final. Our final product is a working prototype of a decentral mortgage market, which enables people that need funding to place mortgage and loan requests, receive mortgage offers and investment offers from financial institutions and investors. Financial institutions are able to receive mortgage requests and provide mortgages. Investors are able to search for investment opportunities, view campaigns that need funding and invest in these campaigns. The application can be run headless or using a graphical user interface, making it accessible for different types of users. It exposes a public API so third-parties can integrate it into their application. This is all possible without the risk of the mortgage market platform being shut down.