Toronto-based Bloom has raised $7 million in Series A funding to make applying for reverse mortgages easier.
SixThirtyVentures led the round. Bloom did not name other investors that participated.
Reverse mortgages are a type of home loan that allows homeowners to borrow against the accumulated equity in their properties. This enables them to defer repayment of the loan and interest until the borrower sells the home, moves out of it, or dies.
Bloom extended nearly $100 million CAD to homeowners in Ontario and British Columbia.
Though reverse mortgages can offer benefits to seniors in Canada looking for supplemental income in their retirement, this type of loan is also associated with several risks for consumers as it offers many opportunities for confusion and misinformation.
A 2015 report by the United States’ Consumer Financial Protection Bureau, found that many consumers had misconceptions about important features and terms of reverse mortgage loans after viewing advertisements.
Founded by Ben McCabe in 2019, Bloom aims to make reverse mortgages applications more transparent and streamlined by combining the use of an online registration form and opportunities to speak with agents. It also offers a free online tool to calculate how much money homeowners could qualify for.
To use Bloom’s services, users must share details about themselves and their properties through Bloom’s website. The process follows the traditional route of applying for reverse mortgages from there, as the rest of the application is taken offline and handled by people.
After registering through Bloom’s website, clients will then go on a phone call with a customer representative who will collect further details about the homeowner and the property. Bloom will review the application to determine the homeowner’s qualifications for a reverse mortgage. In this stage, Bloom may need to conduct an appraisal of the property, which will be organized and paid for by the startup.
For approved reverse mortgages, Bloom’s customer representatives would send the client a commitment letter, which includes standard information like the available amount as part of the reverse mortgage, as well as terms and conditions.
Bloom said its platform has been actively expanding since it launched in 2021. It claims to have extended nearly $100 million CAD to homeowners in Ontario and British Columbia to date.
Bloom joins other lending firms in Canada that aim to digitize certain processes in applying for reverse mortgages such as Fraction Technologies, HomeEquity Bank’s CHIP, and Equitable Bank.
With this new funding, Bloom aims to accelerate its investments in product development as well as continue its geographic expansion.
Featured image courtesy Bloom.
