Can I Use Crypto To Pay Off My Mortgage?
Despite rising interest rates have brought house-seekers away from the market, the number of buyers in the real estate sector is still high. In particular, many opportunity-hunters are looking at cryptocurrencies as a method of payment for their mortgage. Is it possible to buy a house using crypto? Yes, it is. But there are some limitations.
Several cryptocurrency payment processors allow you to pay your mortgage directly with crypto. These processors typically convert your crypto to fiat currency before sending it to your mortgage lender.
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What housebuyers need to buy a house with digital assets is a cryptocurrency-backed mortgage. This is a type of mortgage where your cryptocurrency holdings are used as collateral. This means that if you default on the mortgage, your lender can seize your crypto. However, with a crypto-backed mortgage, you may be able to get a lower interest rate than with a traditional mortgage.
L&C Mortgage brokers said: “As this form of currency is still relatively new, some lenders will not accept this and may immediately deny your application; however, some lenders will consider offering you a mortgage and accept money derived from cryptocurrency as a deposit.”
Documents Needed
Pay attention to documents. L&C Mortgage highlights the fact that anti-money laundering regulations mean lenders must trace the source of any money that has been put towards a mortgage down payment.
L&C said: “As cryptocurrency is not a tangible form of money, it must be converted to traditional money (for example, pound sterling) into the buyer’s bank account, typically done through a third party.”
This means lenders will become weary, as they will need to identify the source of that money. This can be a complicated process, especially as cryptocurrency is unregulated and, unfortunately, has become a route used by money launderers. Buyers will need to cooperate as much as possible when trying to prove that the money has been obtained legally.
L&C added: “It is best to speak to a mortgage broker specializing in dealing with cryptocurrency for deposits, as they will have relationships with lenders who accept various types of cryptocurrencies. They will also advise on what legal documents must be acquired and prepared. For example, have bank statements and other documents that show how much you bought, held, or sold at the ready. Finally, ensure all cryptocurrency profits and earnings are declared to fiscal authority.”
How Can I Get A Crypto-Backed Mortgage?
Number Of Crypto-Friendly Realtors Is Increasing
As the cryptocurrency market continues to grow and become more mainstream, so is the number of estate agents who are willing to accept cryptocurrency as payment for homes.
A recent report by the US National Association of Realtors (NAR) says 38% of real estate agents are comfortable accepting cryptocurrency. This is up from just 12% in 2020.
According to NAR, several factors drive the rise in crypto-friendly realtors, including:
- The growing acceptance of cryptocurrency: More and more people are using cryptocurrency to buy goods and services, and this is also translating into the real estate market.
- The desire to cater to a wider audience: Real estate agents who are willing to accept cryptocurrency can reach a wider pool of potential buyers, including those who are wealthy and tech-savvy.
- The potential for higher commissions: Crypto-friendly realtors can charge higher commissions because they are providing a specialized service.
If you are considering buying or selling a home with cryptocurrency, it is important to work with a realtor who is familiar with this type of transaction.
Disclaimer
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
