Updated: March 16, 2022

Cryptocurrency Mortgages

Looking at buying a house with crypto profits? Whether it's Bitcoin, Ethereum or anything else, find out exactly what to do next if you need a crypto mortgage!

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: March 16, 2022

Cryptocurrency is a fast-growing space within the world of finance and you may be starting to notice more utility for these tokens. If you have access to a large quantity of digital assets, perhaps you’re wondering if it’s possible to get a crypto mortgage.

This guide will give you some clarity on your mortgage options if your income comes from Bitcoin or another cryptocurrency. And, if there are lenders who can accommodate a crypto-backed home loan. You’ll also learn whether or not you can use the tokens for your deposit and where to find open-minded lenders for this.

Read on for more information or jump to a topic using the menu below…

Can you get a mortgage using cryptocurrency?

Right now, there’s no direct route to arranging a mortgage purely based on income from cryptocurrency. But this is something that may change as digital assets become more mainstream. If more people and companies start using blockchains on a regular basis, then cryptocurrency could be better integrated into the mortgage process.

That being said, there are certainly ways that you can use your Bitcoin or crypto to help boost your mortgage application. The exact way you can utilise these assets to your advantage will vary. There are only a small number of lenders with enough education in the processes involved, and a high enough appetite for risk, to create a loan involving cryptocurrency in any shape or form.

Why lenders don’t like digital assets

There are two main reasons that the majority of lenders and high street banks do not like cryptocurrency when it comes to mortgages:

  1. There’s a higher risk of money laundering. This is a lot of hassle for them because they could face serious fines.
  2. Profits from digital assets like Bitcoin are seen as a high risk income source (no matter how skilled or technically adept you are in this field).

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How crypto currency can help mortgage applicants

Currently, there’s no lenders who provide complete crypto or Bitcoin mortgages. However, there are some lenders who are open to letting cryptocurrency play some role in the borrowing process. The nature of this role will vary between lenders, but it may be possible to use the proceeds from crypto to…

  • Serve as your mortgage deposit
  • Make payments on your mortgage after you’ve qualified for it
  • Pay your mortgage off completely, again after you’ve been approved for it

There are a small minority of lenders who will allow the above, providing you supply appropriate supporting documents and evidence to show them where your currency came from. You’d also need to qualify for a mortgage under their standard affordability assessment. This means meeting criteria that excludes your crypto holdings.

But most mortgage providers won’t let you declare crypto profits as part of the application itself. This is due to the potential risks of money laundering and the volatility of this currency. They may even report you to the National Economic Crime Centre (NECC) if they suspect that your cryptocurrency is illegitimate in any way.

Making monthly mortgage payments using Bitcoin or crypto

This is possible, but you’d have to fully convert your cryptocurrency into fiat currency such as pound sterling first. When doing this, you’re triggering a taxable event, so you’ll really have to be on top of your personal taxes.

If you need help managing this, an expert broker with knowledge of the UK tax system can help guide you and make sure you don’t shoot yourself in the foot.

You also need to be aware that the volatility of digital assets means they can fluctuate wildly in value. So, be careful if you’re banking on using crypto funds to pay for your monthly mortgage payments. The prices can plummet in minutes, which is why most lenders won’t consider these assets as part of your affordability assessment.

How a broker can help you

Using a broker with crypto experience means that they can discuss all the potential lenders who’d be open to a tailored borrowing arrangement. This could mean allowing crypto profits for a deposit, or using them for your monthly repayments.

If you already have a mortgage, but your lender won’t allow you to make payments with crypto, a broker who specialises in this currency could help you remortgage onto an agreement with a new mortgage provider who has no issue with it.

Along with introducing you to crypto-friendly mortgage lenders, a specialised broker will also be able to help you prep all necessary documents for your application. This will include putting together the relevant paper trails to prove the origin story of your holdings.

Even if you’re not able to be matched with a lender open to your situation, a skilled advisor will be able to keep you updated on this fast-moving area. Because your options will likely change and grow over time.

So, to avoid unnecessary rejections or blemishes on your credit report just make an enquiry and we’ll put you in touch with an expert broker. They can introduce you to the right lenders and keep you in the loop on the latest developments relating to mortgages and crypto.

Using crypto to pay for a mortgage deposit

It is possible in some instances to use profits from cryptocurrency to pay for your deposit. Similar to the way in which you could use the profit from any other investment. However, money coming from crypto will be heavily investigated and scrutinised by lenders.

This will usually involve showing a paper-trail explaining the origins of your investments. The purpose of this is to comply with Anti-Money Laundering (AML) regulations. You may need to use a forensic accountant for this task, and documents for your holdings will have to show:

  • Where the capital came from that you used for purchasing crypto
  • Dates detailing where and when you made your investments
  • How you held and used the cryptocurrency, e.g. on an exchange, using offline wallets, or through a decentralised (DeFi) peer-to-peer platform
  • Bank statements detailing all the relevant transactions
  • Who bought your crypto, including where and when you sold it
  • Proof you’ve reported any gains and paid tax on them

If you’re thinking of using crypto to pay for some or all of your deposit, it’s crucial that you speak to a lender who’s open to this idea. There’s only a small group of around a dozen in the UK. Such a compact niche means that they will only consider applications on a case-by-case basis. Introduction from a trusted broker will really boost your prospects.

What are the tax implications of this?

You may have to prove any profits have been declared with HMRC. This is because anything over your Capital Gains tax-free allowance of £12,300 must be taxed appropriately. If your lender has any doubts, they may even file a Suspicious Activity Report.

Crypto is more complex than standard investments because tax can apply when you transfer between digital assets. Not just when you ‘off-ramp’ and convert funds into sterling or another fiat currency.

Most legitimate cryptocurrency exchanges, such as Coinbase, in the UK now follow stricter KYC (Know Your Customer) guidelines. This is helping to remove some of the anonymity. However, it’s only a small step towards proper regulation of digital assets and most banks still don’t look favourably on these transactions.

Speak with a specialist broker who understands crypto

Using cryptocurrency like Bitcoin as part of a mortgage application can be an extremely tricky and delicate landscape to navigate. It’s vital that you have professional support from an experienced broker who knows what they’re talking about.

We offer a free broker-matching service, which means we’ll introduce you to a broker who understands the crypto industry. They will also have existing relationships with the lenders who are open to digital assets contributing towards your mortgage.

Just call 0808 189 0463 or make an enquiry and we’ll arrange a free, no obligation chat between you and your ideal crypto friendly mortgage broker.

FAQs

Does investing in cryptocurrency affect a mortgage application?

Yes, it can affect your application. Some lenders do not look favourably on things like cryptocurrency investing, forex trading, or dealing heavily in stocks and commodities. So, if you take part in these activities, it’s really important you speak with a lender who won’t penalise you for doing so.

Do mortgage lenders prefer some types of crypto over others?

Yes, some lenders will look more favourably on different types of crypto. For example, something like Bitcoin can be extremely volatile in price. Whereas a stablecoin that’s pegged to a currency such as the US Dollar can be more appealing. Since it’s more stable and reduces some of the risk for lenders.

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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects. Ask us a question and we'll get the best expert to help.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

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FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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