It is estimated that around 300,000 british have made investments in cryptocurrency, which is a relatively large proportion of the population. For some, the investments are successful, and they may end up with a large cryptocurrency gain.
But can you really use the profits from crypto trading on home purchases or the like? At the beginning of 2022, many could read about the Norwegian Mathias Marthinsen who was allowed to do just that.
Find out if it is likely that the bank can also help you with financing certificates, if you have a cryptocurrency gain!
Theoretically possible to buy a home with cryptocurrencies
When the british crypto investor Marthinsen wanted to use the cryptocurrency gain of NOK 2.5 million to buy a home, this should first prove to be problematic. He sent applications to a number of banks, and waited for several months for a response.
DNB refused , and justified this on the grounds that they considered the risk of money laundering and terrorist financing to be increased.
After a long wait, however, both Sparebank1 and Handelsbanken gave the green light for the money to be used as equity for home purchases. Marthinsen eventually received a financing certificate from Handelsbanken, so that he can realize his housing dream if desired.
However, Handelsbanken has not made any statements about the factors behind the positive assessment.
Document all transactions and pay tax on the gain
When you apply for a mortgage, the bank will know where your money comes from . As you probably know, you have to provide 15% equity when buying a home. If this money comes from saved money from taxable income, it is usually not a problem.
If, on the other hand, the money turns out to come from cryptocurrency trading, there is a greater chance that the bank will refuse. It is often difficult for cryptocurrencies to document how the money is earned. Handelsbanken gave the green light to Marthinsen, but not everyone gets an equally positive answer.
We do not know exactly what assessments the bank made when Marthinsen was granted the application for a mortgage, but the cryptocurrency gain was taxed. The Norwegian could also document every single purchase / sale, so that the bank could track where the money came from.
The reason why banks are somewhat reluctant to give mortgages to crypto investors is probably first and foremost that they do not want to lend money to those who have made obscure crypto investments. The most important thing you can do is therefore to:
- Document what kind of investment the money comes from
- Be able to show that you have taxed the gain
Why does the bank believe the risk of money laundering is increased?
The most important reason why british banks and authorities often show skepticism about cryptocurrencies is that the currency is digital and that the transactions are largely carried out anonymously.
It is possible to see which crypto addresses the money is sent to and from, but it is far more difficult to find out who actually owns the addresses. It is possible to identify who owns the addresses, but this requires plenty of expertise. But the long arm of the law will eventually find you if they want, something this guy can sign.
British e-banks generally do not have the necessary expertise to be able to identify the transfers.
When the bank does not know where the money comes from, certain precautions must be taken. In the bank’s eyes, the money you have earned on honest investments can come from money laundering or drug dealing. Therefore, make sure that you can document all transactions if you are applying for a mortgage.