Crypto-Friendly Mortgage Lenders

Many people living in the UK are turning to Bitcoin and other types of cryptocurrency as a form of investment rather than more traditional methods. 

But despite being around since 2009 and the number of global crypto users set to reach 850 million in 2024, mortgage lenders are still apprehensive about this for obvious reasons. 

Banks and lenders may be reluctant to consider applications with cryptocurrency gains as the source of deposit and definitely as income due to illicit activities, such as money laundering and its generally ambiguous nature.

Nonetheless, in this article, we’ll explain how you can still buy a house using crypto, and list some of the crypto-friendly mortgage lenders who can help you do so.

Read on to know more.

Can You Use Cryptocurrency To Buy A House?

You may be able to use cryptocurrency to buy a house by finding a seller willing to accept a direct crypto transaction. However, most will use the method of selling the cryptocurrencies and use the conversion into sterling as your mortgage deposit as additional finance is needed to complete the purchase.

Just keep in mind that the solicitor and lender will scrutinise the source of these funds very carefully to comply with the Anti-Money Laundering or AML regulations. 

Very importantly, you will need to give them an audited paper trail of your cryptocurrency for any mortgage lender to consider its usage.

You will need to provide the following information:

• The original source of the crypto, including its purchase
• Sources of funds
• Crypto trades and exchanges
• Where and to whom the crypto was sold

With an audited trail, your lender will be more willing to accept your mortgage application. However, if financial fraud is suspected, the application may be sent to the police/HMRC for further investigation.

Can Crypto Profits Be Presented As An Income Source On Mortgage Applications?

You can’t declare the profits earned from cryptocurrency sales as your income in mortgage applications, and there are not any lenders we know currently willing to consider it.  

This is because of the unpredictable nature of crypto. The value tends to fluctuate even more than the stocks and shares market, making it difficult for mortgage lenders to make a proper assessment in terms of using it within an affordability assessment.

That means lenders will only accept cryptocurrency profits as a form of deposit if audits are conducted to check where the original source has come from.

Can You Pay Your Mortgage Using Cryptocurrency?

You can’t make direct crypto payments but can use the profits to make your mortgage payments once your mortgage is up and running once it is converted to sterling. This is because the lender will have assessed the affordability using acceptable forms of income beforehand when originally applying.  

In other words, you’ll need to sell the crypto for fiat currency, such as pounds sterling (in the UK), to make the mortgage payments each month. 

If lucky, you might also be able to pay off your mortgage debt using cryptocurrency profits alone, but you’ll be scrutinised to check the source of funds potentially even though the mortgage is up and running as it is a large lump sum being used. 

Crypto-Friendly Mortgage Lenders

Some of the big names in the financial sector, such as Barclays accept cryptocurrency profits as mortgage deposits on a case by case basis.

You may also consider applying to lenders like Pepper Money, Norton Home Loans, Loughborough Building Society, Bluestone Mortgages, and Generation Home.

Even HSBC, AKA the British Banking Giant, allows customers to settle their mortgage balances using cryptocurrencies, including Bitcoin, Ethereum, BNB and Dogecoin.

Once again this is on a case by case basis and after satisfaction of the relevant checks. Please talk to us for the most up to date information. 

The list of crypto-friendly lenders in the UK is currently small, but with the growth rate of the cryptocurrency market, this list is likely to grow.

How To Get A Mortgage From A Crypto-Friendly Lender?

Follow the steps mentioned below to apply for a crypto-friendly mortgage:

Step 1: Find A Crypto-Friendly Mortgage Broker To Seek Advice

You need someone experienced in cryptocurrency and the property market. So, start by seeking advice from a broker specialising in mortgages with crypto or Bitcoin deposits. 

They can recommend crypto-friendly lenders who accept cryptocurrencies like Bitcoins and Ethereum.

A reputable and experienced broker will also help you gather the required paperwork and strike the best mortgage deals available to you.

Step 2: Gather Info About Your Cryptocurrency Holdings And Get The Paperwork Ready

As mentioned earlier, lenders will scrutinise the source of your funding to satisfy the Anti-Money Laundering (AML) regulations. 

As such, you will need to prepare a proper paper trail that documents how you acquired and sold your cryptocurrency holdings. 

The paperwork will include bank statements and other documents reflecting the following:

• The source of funds you used to purchase the cryptocurrency 
• The valuation and duration of holdings
• Location of the crypto holdings – on an exchange or offline wallets
• When and where were they sold and bought

Step 3: Declare The Crypto Profits To HMRC

You must declare your income to HM Revenue & Customs (HMRC) and pay tax on the crypto gains to legally use them as a deposit for your house. 

Anything above the capital gains tax-free allowance, which was cut to 6,000 pounds in 2023, will be taxed. 

So, if the lender sees that you haven’t paid the right tax amount, your mortgage application may  get rejected.

You could also get into trouble if the lender decides to file a suspicious activity report with the HMRC.

Please bear in mind the above is not investment advice, it is just for information purposes. 

Frequently Asked Questions (FAQs)

1. Why Are Mortgage Lenders Reluctant To Consider Crypto Mortgage Applications?

It’s not easy to find a crypto-friendly mortgage lender because of the anonymity and risk involved with cryptocurrency.

The market is unregulated, so it’s not easy to track the source of funds used to purchase crypto coins and where the currency has been used whilst it’s been held. As such, cryptocurrency is a common route for money launderers.

Lenders also consider the volatile nature of the crypto market to be a risk. The constant fluctuations in value make it difficult for them to make a proper value assessment.

2. Do Mortgage Lenders Consider Crypto Profits For Affordability Assessments?

Affordability assessment is an important prerequisite when applying for a mortgage. The mortgage lender takes applicants income and expenses into account to check if the borrower can repay the loan.

If the gains from your cryptocurrency make up a large part of your income, you’re in for some bad news. As of now, most lenders do not consider crypto profits when conducting affordability assessments because of the volatility of crypto and the risks involved.

3. What Are The Crypto-Friendly Banks In The UK?

Some of the most popular banks in the UK that allow you to secure a mortgage with crypto are Barclays, Bluestone, Norton home loans and Lendinvest among others.  

4. Do Lenders Allow You To Use Cryptocurrency As Deposit For Mortgages?

Lenders may allow you to use cryptocurrency as a deposit to buy a residential property. 

Unfortunately, crypto-backed mortgages with the underlying currency as collateral are currently only available in the US and not the UK, so an investor can not benefit from future appreciation of cryptocurrency once it is used as a deposit. 

5. When Should You Sell Your Crypto Holdings if using it as a deposit?

Plan well in advance and keep a proper audit trail of your crypto holdings that you are looking to use as a deposit to satisfy both the mortgage lenders and solicitors anti money laundering regulations. 

Your home may be repossessed if you do not keep up repayments on your mortgage.

All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.