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Crypto Mortgage; Step By Step Guide

by Money Giants Editorial Team
January 27, 2023
in Cryptocurrency, Investments
Reading Time: 7 mins read
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Crypto Mortgage; Step By Step Guide

Crypto Mortgage; Step By Step Guide

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Do you want to secure a loan for your dream home? You don’t have to rely on traditional lending institutions to get a mortgage, especially if most of your wealth is in cryptocurrency. On the contrary, there are different crypto loan platforms that you can borrow from. Notably, both traditional and crypto lenders have competitive interest rates. However, how do crypto mortgages work and what can you expect? Please read this step-by-step guide to get the answers.

What are Crypto Mortgages?

Crypto mortgages are home loans that crypto lenders give to crypto borrowers depending on the size of the borrower’s digital asset portfolio. Most lenders accept crypto holdings as collateral. This a great approach for individuals who have greatly invested in cryptocurrency. Why? Unlike traditional mortgage lenders, the conventional lenders, who will require you to sell a portion of your cryptocurrency holdings for cash which becomes the down payment for the mortgage, most crypto lenders will accept the holdings directly as collateral. This way, you don’t miss out on any potential gains in the future.

However, not all crypto lenders accept your holdings as collateral. The high volatility nature of crypto makes them skeptical. Thus, you may have to first liquidate your crypto assets before they give you the mortgage. Liquidation of your assets can also be possible in case they drastically drop in value.

Crypto Mortgage; Step By Step Guide
Crypto Mortgage; Step By Step Guide

Steps to Getting a Crypto Mortgage

If you want to borrow a crypto mortgage, you will follow these steps to get the loan;

  • Step 1; Determine the amount you can borrow depending on the worth of your crypto holdings.
  • Step 2; Check different crypto mortgage lenders and the interest rates they charge.
  • Step 3; Choose your most preferred crypto lender. Sign up for an account and go through the identity verification process.
  • Step 4; Make an application for the crypto mortgage and complete their registration process. Give the required documents.
  • Step 5; Wait for approval. If successful, communicate the amount you will give as collateral then deposit it.
  • Step 6; Finalize the payment plan. Decide on the interest rate together with your lender.
  • Step 7; Receive the funds to pay for your dream home.

Read: Is Crypto Staking Profitable?


Why a Crypto Mortgage Over a Conventional Mortgage

The conventional mortgage has been the traditional way of getting a home loan. You may have experience with the same, and you are probably getting recommendations on going in that direction. However, as a crypto investor, getting a crypto mortgage has more benefits than you probably know. So, you can look out for a lender that accepts cryptocurrency payments. The following are the reasons why a crypto mortgage is better than a traditional bank;

Accessibility

If you have a good crypto portfolio, you can easily access a crypto mortgage. It enhances an investment in real estate since the focus is not on your income or payment history. Rather, the crypto lender focuses on the size of your asset portfolio.

Requires No Down payment

When you take a mortgage from a traditional bank, you will be required to give some cash as a down payment. Typically, this amount is usually up to 20% of the value of the property. On the other hand, you won’t need any down payment when you take a crypto mortgage.

Reduced Tax Liability

As a crypto investor who uses his crypto as collateral for a mortgage, you enjoy a reduced tax liability. Why? You can keep having your holdings unlike in the traditional lending system where you first withdraw the crypto as cash for a down payment.

It is Faster

Crypto lending platforms require less identification compared to traditional banks. This makes them faster at approving mortgages. Nonetheless, crypto lending is faster as it does not involve a lot of paperwork, and neither does it involve checking your credit scores.


Read: How to Identify Fake Cryptocurrency Exchanges

Fewer Requirements

Traditional mortgages involve a rigorous process. It involves checking the borrower’s credit scores. On the contrary, a crypto mortgage lender will rely on the size of your asset portfolio. If you have a significant portfolio, be sure to get an enormous mortgage. Thus, a good asset portfolio puts you in a position of claiming great offers.

Crypto Mortgage; Step By Step Guide
Crypto Mortgage; Step By Step Guide

Cons of Crypto Assets

As much as there are several benefits to getting a crypto mortgage, we cannot overlook the dangers. Below are some of the cons of opting for this type of loan;

Too many crypto assets as collateral

Unlike Traditional banks and other conventional lenders, crypto lenders expect their borrowers to put in excess crypto assets as collateral for the mortgage.

Liquidation of collateral if there is a fall in crypto value

Crypto mortgages are beneficial to the borrower in case of future gains. However, if the value of crypto falls, it signifies a problem. In extreme cases, you will have to top it up to compensate for the shortfall, failure to which the lender may seize your assets.


Notably, different crypto lenders use various parameters to determine when to liquidate your assets so they can have the cash. For instance, your lender may request for liquidation of your crypto in case there is a continuous fluctuation of the value of your asset within a particular period such as thrice in a month.

Read: Cryptocurrency Market; AI Use in Bitcoin Trading

High Risk of Failure

Cryptocurrency is a risky space for investors. Most crypto mortgage lenders usually have less oversight compared to traditional lenders. This in turn increases the risks of failure.

Additionally, crypto is volatile. This means you may have a lot of profits in one minute and lose everything in the next minute.

Lack of Control

Once you give your crypto assets as collateral for a mortgage, you have no control over them until the lender releases them to you. Therefore, since you have no access to them, you may never realize an increase in their value.

Should You Get a Crypto Mortgage?

If a great percentage of your wealth is in cryptocurrency and you wish to have your dream home, you can get a crypto mortgage. It exposes you to better loan offers depending on your asset portfolio size. Another great thing about getting a crypto mortgage is that it is faster as it involves less documentation and does not focus on your credit score. Nonetheless, most lenders will accept your crypto as collateral. However, don’t forget how volatile cryptocurrency is as you use your asset portfolio as collateral for the loan.  

Related Articles you Might be Interested in:

How to Get a Crypto Loan from Crypto Banks

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Step by Step Guide on How to Start Accepting Crypto Payments

Tags: crypto lenderscrypto lendingcrypto loanscrypto morgages
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