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Can I use Crypto as a deposit for a mortgage?
Yes! The good news is that it is possible to use your cryptocurrency such as Bitcoin as a deposit for a mortgage.
However, you'll need to convert it to standard currency before it will be accepted, and even then not all mortgage lenders will be happy to accept it as a source of deposit. Why? This is because mortgage lenders are highly regulated by the financial conduct authority and cryptocurrency can be associated with money laundering.
Do all lenders accept cryptocurrency?
No, there are currently only a handful of mortgage lenders in the UK that will accept Bitcoin or another cryptocurrency as a mortgage deposit.
At the time of writing, the majority of lenders are highly unlikely to accept Bitcoin or other digital currencies, however, as virtual currency and Bitcoin investors become more mainstream, this scenario is likely to change.
We highly recommend engaging an experienced mortgage broker and getting expert mortgage advice if you're considering using cryptocurrency to fund a deposit. This area of the mortgage industry is specialist and most lenders will not consider these types of deposits.
By using a mortgage advisor with experience in this area, you'll be approaching the right lenders and improving your chances of approval.
Cryptocurrency deposits and mortgage checks
If you're looking to use cryptocurrency as your mortgage deposit, you can expect more stringent checks from your mortgage lender, for example, they may want to see more information about bank account activity and may pay more attention to bank statements than they would normally.
Your bank statement is usually the main source of proof for mortgage providers to determine the amount of savings you have available and are also important for detecting money laundering activity.
As part of these checks, your lender will need to know the source of the cryptocurrency you intend to use as a deposit. They will probably ask for some proof that it's come from an income-generating source rather than being acquired via another speculative investment. This is because mortgages are highly regulated by the financial conduct authority. Although cryptocurrency can be used as a deposit, your lender will require you to convert the funds into sterling at the completion of your mortgage due to money laundering risks.
Lenders who are comfortable accepting virtual currencies will accept applications on a case by case basis.
They will go into more detail on the property purchase, your income and source of funds. You'll need to make sure you have records detailing your cryptocurrency wealth, for example, evidence that you are paying tax on the profits. Some mortgage providers may even perform checks with the financial crime unit before accepting your mortgage application, and if they suspect foul play they could even file a suspicious activity report.
Affordability checks and crypto mortgages
As with any mortgage application, you'll also need to produce evidence of solvency and pass affordability tests which would normally include taking a look at your income and outgoings.
You'll need to provide evidence of your employment, earnings and expenditure. Unfortunately, you will not be able to declare income from your digital currencies as a source of income, however, this may change in the future. This is where using an experienced mortgage advisor comes in – they'll have the experience of different lenders and how they approach these types of mortgage applications.
Let's compare mortgages with Bitcoin
Using Bitcoin as a deposit can be a risky business. If you're considering this option to get on the property ladder, make sure you seek professional advice before making an application to your chosen lender.
A good mortgage advisor will be able to show you the most suitable lenders (who accept digital currency) and they will also guide you through the process of putting together the right documentation to make your application as strong as possible.
The cryptocurrency market can be volatile, so you'll need to be prepared for this when you are looking at using it as your deposit. For example, during periods of volatility, banks are likely to place an increased level of scrutiny on accounts where cryptocurrency is held. The nature of your mortgage application may change slightly depending on the volatility in cryptocurrency, so it's worth working with someone who understands the sector to get this right.
What credit score do you need for a crypto mortgage?
As cryptocurrency mortgages are already a niche area of the mortgage lending market, they're most likely to be offered only to the most creditworthy borrowers.
You'll have a better chance of being accepted if you have a good credit rating and history.
With all lenders, a deposit for a property purchase is not enough on its own – you will also need to show that you can afford your monthly mortgage payments. It's also worth bearing in mind that lenders will probably want to see evidence of steady income in order to be comfortable providing a loan for cryptocurrency purchases.
Are cryptocurrency mortgages regulated?
Although the virtual currencies themselves are not subject to regulation, mortgage companies must continue to follow the rules of FCA regulation which govern all mortgage lending. Mortgage providers that accept crypto need to do so responsibly by asking for detailed evidence from applicants about their income and expenditure.
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What is the future of cryptocurrency mortgages?
As Bitcoin and other cryptocurrencies become more mainstream and regulated, we expect that the number of lenders who will accept these currencies as a deposit is set to increase.
You can expect lenders to try out cryptocurrency mortgages with a small number of customers before making any widespread changes. For now, it's wise to explore the potential of crypto mortgages with an experienced mortgage advisor. They can help to break down the barriers between you and your dream home by finding suitable mortgage providers for cryptocurrency deposits.
How long does it take to get a cryptocurrency mortgage?
When it comes to applying for a Bitcoin or other cryptocurrency mortgage, it can take longer for mortgage providers to perform all the checks needed to assess your application and make sure they are comfortable with the transaction.
You should give yourself enough time to meet any requirements for proof of funds and other documentation.
Apply for a cryptocurrency mortgage now
If you want to use Bitcoin or another cryptocurrency as a mortgage deposit, you'll need to work with an experienced mortgage advisor and get sound financial advice.
This area of the market is specialist and, in most cases, using mortgage brokers who have experience in this sector is likely to improve your chances of being successful.
Get started with Teito now by comparing mortgage deals and you could get a mortgage in principle in less than 5 minutes. As a truly independent mortgage broker, we compare thousands of deals, including all lenders that accept digital currency as a mortgage deposit.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.