Bitcoin and Mortgage Lending
Bitcoin adoption is quickly gaining traction in the real estate industry, with many property developers and realtors now allowing people to purchase homes using Bitcoin. Similarly, several mortgage lending companies have announced plans to enable borrowers to obtain mortgages and repay them using Bitcoin. Many US and UK-based mortgage lenders now accept monthly payments in Bitcoin and other digital currencies.
How Bitcoin and Mortgage Lending Works
Although Bitcoin and mortgage lending have a lot of hype surrounding them, most people do not clearly understand how they work. Well, here is what you should know about Bitcoin and mortgage lending.
Most mortgage lending companies only allow their borrowers to repay the loans in Bitcoin but do not accept the same for deposits. However, individuals can still use profits generated from Bitcoin to fund their mortgage deposits. Borrowers would need to sell their Bitcoin tokens through platforms such as this BitIQ official trading app and produce a record of the acquisition to find lenders willing to accept that capital.
The lenders that accept Bitcoin mortgage deposits have strict rules to prevent fraud and other related financial risks. They often approve such applications on a case-by-case basis and require proof of the funds’ traceability and conversion. Nevertheless, that would not be very difficult since blockchain maintains an accurate and irreversible transactional ledger.
Unlike conventional mortgage lending, Bitcoin mortgage borrowers do not need bank accounts. Instead, Bitcoin users store the reserves in crypto wallets online or offline. However, borrowers might require specific Bitcoin wallets based on the lender’s terms and conditions.
Nevertheless, Bitcoin mortgage lending does not involve extensive paperwork because of blockchain. The technology enables lenders to develop and execute smart contracts, ensuring greater convenience and security for service providers and customers.
It is also worth noting that Bitcoin mortgage lenders do not accept virtual currencies as declarable income when making loan applications. That is mainly because of their high volatility, making it very difficult for the loan providers to assess the level of risk. It even becomes more challenging when the borrower cannot verify the source of those Bitcoin tokens.
Cryptocurrencies are still in the early adoption phase and, many lenders consider them as marginal forms of capital. However, the industry might adopt a unified stance in the future, based on the market stability. That could create the ideal platform for introducing Bitcoin mortgages to borrowers.
Finding a Reliable Bitcoin Mortgage Lender
Only a handful of companies accept mortgage payments in Bitcoin, despite the increasing adoption. Most mortgage lending institutions are still developing systems to facilitate crypto transactions. That means you must do some research to find a trusted Bitcoin mortgage lending company with the correct terms and conditions to suit your needs. Nevertheless, service providers include banks, building societies, and specialist lenders.
Finding the right Bitcoin mortgage lender with products tailored to your needs and circumstances may not be easy. But, you can easily avoid the market’s hurdles by engaging a professional such as a specialist mortgage broker. One with experience in crypto-based mortgages can help you narrow down the list of lenders without hassles, leveraging their knowledge of the industry and the current market statistics.
Engaging an experienced crypto mortgage broker would enable you to avoid so many pitfalls, including fraudulent lenders. Besides, the specialist would also offer you in-depth information about what to expect from different lenders, based on your needs and situation. Also, read the customer reviews of various Bitcoin mortgage lending companies online to better understand the market and their practices.
The pandemic and volatility concerns have slowed down Bitcoin adoption in mainstream financial and real estate sectors. However, Bitcoin has so far demonstrated its significant potential in transforming various aspects of global finance and housing beyond mortgage lending.