Lenders open to crypto-funded mortgages

Lenders open to crypto-funded mortgages

UK banks and building societies are open to accepting mortgage deposits funded through the proceeds from cryptocurrency investment, FTAdviser has learned.

Following a turbulent year for Bitcoin sales, and speculation that some global banks will not accept funds associated with cryptocurrency sales, a number of lenders in the UK said they are open to the prospect as long as certain criteria are met.

But the lenders are less willing to accept cryptocurrency investments as income for affordability purposes or deposits in the form of cryptocurrency.

Concerns centre around the issue of money laundering, as it can be difficult to ascertain where the money has originally come from.

A spokesperson for the Building Societies Association (BSA) said the trading of cryptocurrencies is comparatively new and home buyers funding a deposit in this way was still considered unusual.

But she said: “A number of building societies will consider Sterling payments from a crypto source if the customer can provide the necessary documentary evidence to satisfy anti-money laundering due diligence.”

While anti-money laundering due diligence is considered normal when any new account is set up, including a mortgage, the unregulated nature of cryptocurrencies means some lenders will put them into the highest money-laundering risk category.

When asked about their cryptocurrency policies, Santander, Skipton Building Society and Royal Bank of Scotland all said sources of funding used for mortgage deposits are assessed on a case-by-case basis, including those derived from cryptocurrency investments.

A spokesperson for Skipton Building Society said: "To date we have had very few such applications and require the customer to provide evidence from their cryptocurrency exchange so we can review how the proceeds have been obtained, ensuring they have not come from illicit goods or services.

"As part of this we will consider the legitimacy of the exchange itself and may contact them to verify the information we have been provided with."

Dale Jannels, managing director at All Types of Mortgages, believes the use of proceeds from crypto investment to fund property deposits will become more popular and he said the industry needs to assess how to best accommodate customers of this nature.

He said: "Money laundering can definitely be a massive issue with this financial scenario, but how different is it from the procurement of funds from stocks and shares?

"Cryptocurrency can be more volatile than the stocks and shares market as it is available to trade 24/7 but I do not see why lenders should not accept funds of this nature as long as sufficient procedures are in place to check where they have come from."

Despite this, Barclays and Santander specified cryptocurrency investments would not be recognised as income for affordability, with the latter also stating deposits in the form of cryptocurrency would not be accepted.   

Halifax, meanwhile, is believed to have shut its doors altogether to funds derived from cryptocurrencies to procure a mortgage.