Crypto-backed mortgages allow borrowers to leverage their cryptocurrency holdings as collateral to finance real estate purchases.
Crypto-backed Mortgages: Basic Understanding
These mortgages let borrowers use cryptocurrencies like Bitcoin or Ether as collateral, enabling access to funds without selling digital assets, and capitalizing on future price increases. Key types include purchase mortgages, cash-out refinancing, and bridge loans.
Crypto-backed Mortgages vs Traditional Mortgages
Differences span eligibility requirements to risk factors. Traditional mortgages are based on credit history and income, whereas crypto-backed mortgages utilize digital assets.
How Do Crypto-backed Mortgages Work?
The process involves lenders assessing the value of the crypto assets and issuing a loan based on this valuation. Loan-to-value ratios help determine borrowing limits. Smart contracts automate loan agreements.
Crypto-backed mortgages offer an innovative way to access real estate financing but require careful risk assessment due to cryptocurrency volatility and regulatory uncertainties.
