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Cryptocurrency and Mortgages

Get expert guidance on how cryptocurrency can be used towards your mortgage

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: July 1, 2021

Cryptocurrencies like Bitcoin are relatively newcomers in the world of finance, and as such, many mortgage lenders and brokers don’t 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.

To dispel some of the myths around purchasing property with Bitcoin and other virtual tenders, we’ve put together this guide to cryptocurrency and mortgages. Here, you’ll learn whether it’s possible to use cryptocurrency for a house deposit, declare it as income for a mortgage lender’s affordability assessment, or pay off an existing mortgage with it.

Can you use Bitcoin or another cryptocurrency as a mortgage deposit?

While you can’t use the cryptocurrency itself as a mortgage deposit, it’s possible to use profits from it to fund your deposit. You’d 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’s difficult as the number of approachable lenders is slim.

Many mortgage providers will turn you away outright if your mortgage deposit is made up of Bitcoin profits, since they’ll be wary of funds that aren’t fully traceable. There are, however, around a dozen UK lenders who consider Bitcoin mortgage deposits.

The 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.

Some lenders even refer applications with Bitcoin deposits over to the financial crime unit to double check there’s 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.

Which mortgage companies accept Bitcoin deposits?

At the time of writing (April 2021), there are around six UK mortgage companies that accept Bitcoin-based deposits. They’re a mixture of banks, building societies and specialist lenders. Approaching one of these lenders directly is not recommended, and we’ll explain why.

If you’re 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.

With only a handful of lending options to choose from, there’s a big margin for error when choosing a mortgage provider at random. And even if they do accept Bitcoin, there’s no guarantee you’ve found the lender offering the best products for your needs and circumstances.

This 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’s best positioned to offer you a great deal.

We 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.

Can you declare cryptocurrency as income on a mortgage application?

This isn’t possible at present. Mortgage lenders don’t 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’s the borrower’s main income.

Is this always likely to be the case?

Not 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.

That said, they’re 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.

One 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’s some movement on this front already.

With this in mind, it’s always worth speaking to an expert if Bitcoin is your main source of income and you’re 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.

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Can you pay a mortgage with cryptocurrency?

Yes, you could potentially make payments on an existing mortgage with profits from cryptocurrency, which means you’d have to sell the currency and convert it.

But 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 £12,300 per annum exemption.

If you’re 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.

Can you pay off a mortgage with Bitcoin?

You 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.

Speak to an expert about cryptocurrency and mortgages

If you’re 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.

Finding the right lender for such a niche area of finance can be tough, but with the right broker on your side, it’s more than possible to find a favourable deal.

We offer a free broker-matching service that can pair you up with a handpicked specialist mortgage advisor. It will ensure you’re matched with some with a strong track record of helping people buy property with cryptocurrency deposits and ensuring they get the best rates.

Not only can they help you save time and money, they can also offer you up-to-date information about mortgage lenders’ 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.

Call us on 0808 189 2301 or make an enquiry and we’ll set up a free, no-obligation chat about cryptocurrency and mortgages between you and your ideal broker today.

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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!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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 who 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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