It’s a simple enough question, but one which has kept many a lucky crypto investor up at night: how can you go about using your profits to buy a house?
If you’ve been fortunate enough to make a large return on investment through savvy crypto trades, then you may be thinking about using it to get on the property ladder. Here are a few things you’ll need to consider.
Using crypto for your deposit
Using crypto earnings to fund your deposit isn’t quite as simple as converting the money into cash and turning up at the bank. Due to anti-laundering regulations, mortgage lenders will want to be assured that the money you’re using is clearly traceable. At the very least, you’ll need to provide thorough records showing all of your cryptocurrency transactions and the profits that were made. But even then, many major high street lenders will consider it too risky to go through with.
We would suggest finding a crypto-friendly mortgage broker to help you navigate the situation. They’ll know which lenders are most likely to take you on board, and they’ll also be able to talk you through the various bits of documentation that are likely to be required.
Using cryptocurrency as proof as income
Unfortunately, the current stance from UK banks is that cryptocurrency assets can’t be taken into account when looking at your income and assessing affordability. Banks will typically offer a mortgage of up to 4.5x your income. They don’t include crypto when calculating this figure, partly due to the lack of traceability mentioned above, and also because the volatility of the crypto market means it’s not necessarily a reliable source of funds.
Paying your mortgage
Paying your monthly mortgage payments using crypto profits is far simpler than using them for the deposit. In fact, all you need to do is cash in your crypto, make sure you’ve paid the correct taxes, and use the money to make your payment in the same way that you would use any other type of income. This means that cryptocurrency earnings can help to supplement your monthly finances, making it easier to pay off your mortgage and bills each month. If you’re not yet a homeowner, the earnings could also be used to pay rent in the same way.
But what if you’ve had a windfall, and want to use your cryptocurrency to pay off your outstanding mortgage all in one go? Your mortgage lender will want to verify the money – and although they’re more likely to accept it in this instance than for a deposit, all the same checks will apply. That means you’ll need to have a very detailed record of your transactions, as well as proof that you’ve made the correct tax payments on your cryptocurrency. If the paperwork is in place, you should be able to make the payment without too much trouble.
So, while buying a house with crypto profits isn’t always the simplest process, it’s definitely possible. You could also consider using a trading platform such as bitcoin millionaire to increase your crypto earnings, helping to build your funds and give you more options when it comes to making a purchase.