Cryptocurrencies like Bitcoin are relatively newcomers in the world of finance, and as such, many mortgage lenders and brokers don\u2019t quite know where they stand on it. Although some investors have found Bitcoin lucrative, the volatility of this virtual currency and difficulty tracing its origins has made it of limited use for buying property in the UK.\r\n\r\nTo dispel some of the myths around purchasing property with Bitcoin and other virtual tenders, we\u2019ve put together this guide to cryptocurrency and mortgages. Here, you\u2019ll learn whether it\u2019s possible to use cryptocurrency for a <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/deposits\/">house deposit<\/a>, declare it as income for a mortgage lender\u2019s affordability assessment, or pay off an existing mortgage with it.\r\n<ul>\r\n \t<li><a href="#use-cryptocurrency">Can you use cryptocurrency for a mortgage deposit?<\/a><\/li>\r\n \t<li><a href="#declare-bitcoin">Can you declare Bitcoin as income for a mortgage application?<\/a><\/li>\r\n \t<li><a href="#existing-mortgage">Can you pay off an existing mortgage with Bitcoin?<\/a><\/li>\r\n \t<li><a href="#expert">Speak to an expert about Bitcoin and mortgages<\/a><\/li>\r\n<\/ul>\r\n[feefo-banner]\r\n<h2 id="use-cryptocurrency">Can you use Bitcoin or another cryptocurrency as a mortgage deposit?<\/h2>\r\nWhile you can\u2019t use the cryptocurrency itself as a mortgage deposit, it\u2019s possible to use profits from it to fund your deposit. You\u2019d need to sell the currency and produce a document trail of its acquisition and sale to have any chance of finding a mortgage lender who is willing to accept this capital. And even then it\u2019s difficult as the number of approachable lenders is slim.\r\n\r\nMany mortgage providers will turn you away outright if your mortgage deposit is made up of Bitcoin profits, since they\u2019ll be wary of funds that aren\u2019t fully traceable. There are, however, around a dozen UK lenders who consider Bitcoin mortgage deposits.\r\n\r\nThe mortgage lenders who do consider applications where the deposit is based on converted Bitcoin profits usually apply strict caveats to the agreement. For instance, approval would usually be on a case-by-case basis and the lender will want to see evidence that the crypto funds can be traced, converted into sterling and verified.\r\n\r\nSome lenders even refer applications with Bitcoin deposits over to the financial crime unit to double check there\u2019s no evidence of money laundering. They might also ask for a statement from the fund platform and a bank statement to evidence the contribution trail.\r\n<h3>Which mortgage companies accept Bitcoin deposits?<\/h3>\r\nAt the time of writing (April 2021), there are around six UK mortgage companies that accept Bitcoin-based deposits. They\u2019re a mixture of banks, building societies and specialist lenders. Approaching one of these lenders directly is not recommended, and we\u2019ll explain why.\r\n\r\nIf you\u2019re applying for a mortgage with a deposit derived from cryptocurrency, the chances of rejection are high if you head out into the market without professional guidance.\r\n\r\nWith only a handful of lending options to choose from, there\u2019s a big margin for error when choosing a mortgage provider at random. And even if they do accept Bitcoin, there\u2019s no guarantee you\u2019ve found the lender offering the best products for your needs and circumstances.\r\n\r\nThis is where a specialist mortgage broker comes in. An advisor who specialises in cryptocurrency-based deposits can narrow down the list of lenders that accept them and match you with the mortgage provider who\u2019s best positioned to offer you a great deal.\r\n\r\nWe offer a free broker-matching service that can pair you up with the right expert, someone with the knowledge and experience of cryptocurrency mortgage deposits, as well as an impeccable track record helping people get onto the property ladder with them.\r\n<h2 id="declare-bitcoin">Can you declare cryptocurrency as income on a mortgage application?<\/h2>\r\nThis isn\u2019t possible at present. Mortgage lenders don\u2019t accept cryptocurrency as declarable income for their affordability checks since it can be volatile, and this makes it tricky for banks to assess the level of risk. Furthermore, being unable to fully verify the source of Bitcoin and other crypto capital sources is more problematic when it\u2019s the borrower\u2019s main income.\r\n<h3>Is this always likely to be the case?<\/h3>\r\nNot necessarily. Cryptocurrency is a relatively young form of capital and, depending on how stable the market ends up being over time, the mortgage industry might adopt a unified stance on it. This could pave the way for Bitcoin mortgages to be introduced.\r\n\r\nThat said, they\u2019re unlikely to be mainstream anytime soon and the volatility of virtual currency will likely mean that any products that do become available will have high deposit requirements and a strict eligibility criteria to offset some of the risk.\r\n\r\nOne of the mortgage brokers in our network has confirmed that a leading lender in Ireland is currently reviewing their stance on cryptocurrency income with a view to possibly introducing mortgages based on this, so there\u2019s some movement on this front already.\r\n\r\nWith this in mind, it\u2019s always worth speaking to an expert if Bitcoin is your main source of income and you\u2019re applying for a mortgage. They will be the first to know if cryptocurrency mortgages are incoming, and will be able to give you a full market update.\r\n<h2 id="existing-mortgage">Can you pay a mortgage with cryptocurrency?<\/h2>\r\nYes, you could potentially make payments on an existing mortgage with profits from cryptocurrency, which means you\u2019d have to sell the currency and convert it.\r\n\r\nBut this is only legal if you have declared this income with HMRC and are paying tax on any gains. Bitcoin and other virtual tenders are taxed under Capital Gains Tax regulations, which means they have a \u00a312,300 per annum exemption.\r\n\r\nIf you\u2019re making more than this through cryptocurrency income, it will need to be declared and tax paid at the applicable rate. If you failed to declare this income, your lender gets wind of this, they could file a Suspicious Activity Report with HMRC and land you in hot water.\r\n<h3>Can you pay off a mortgage with Bitcoin?<\/h3>\r\nYou could potentially pay off an existing mortgage in full using profits from cryptocurrency investments, but some mortgage providers will want to verify where your funds came from to allay any anti-money laundering concerns they might have. If cryptocurrency is named as the source of said funds, the lender is only likely to consider your request on the condition that the capital has been verified, declared and the relevant tax is being paid on it.\r\n<h2 id="expert">Speak to an expert about cryptocurrency and mortgages<\/h2>\r\nIf you\u2019re hoping to use cryptocurrency to help you get a mortgage, it pays to seek expert advice first. There are brokers in our network who specialise in Bitcoin-based mortgage deposits, and they have deep, long-standing relationships with the lenders that accept them.\r\n\r\nFinding the right lender for such a niche area of finance can be tough, but with the right broker on your side, it\u2019s more than possible to find a favourable deal.\r\n\r\nWe offer a free broker-matching service that can pair you up with a handpicked specialist mortgage advisor. It will ensure you\u2019re matched with some with a strong track record of helping people buy property with cryptocurrency deposits and ensuring they get the best rates.\r\n\r\nNot only can they help you save time and money, they can also offer you up-to-date information about mortgage lenders\u2019 attitudes towards Bitcoin and other digital currencies. If anything was to change and mortgage providers began offering mortgages based on cryptocurrency income, they will have the latest intel and advice on this.\r\n\r\nCall us on 0808 189 2301 or <a href="https:\/\/enquiries.onlinemortgageadvisor.co.uk\/deposits-advice">make an enquiry<\/a> and we\u2019ll set up a free, no-obligation chat about cryptocurrency and mortgages between you and your ideal broker today.