More and more people are saving in bitcoin (BTC) and some people even have 90 to 100 percent of their wealth in bitcoin. If you are so convinced of the future of bitcoin that you would rather not own other assets, how should you do that if you want to buy a house, for example?
The solution is fairly simple: borrow money with your bitcoin as collateral. The interest on these types of loans is often slightly higher than that of a normal mortgage. You have to count on an interest of 3.95 to 8 percent for these types of products. However, if you expect bitcoin to pick up a higher return on an annual basis than that 3.95 to 8 percent, then borrowing money with bitcoin as collateral can be a good way to buy your house.
Borrow with bitcoin as collateral at Binance
Binance is a party where you can go for a loan with your bitcoin or other crypto as collateral. You can at Binance borrow up to 65 percent of your collateral without exciting conditions. The risk is of course that the value of your collateral, in this case we are talking about bitcoin, falls below 65 percent and then you have to make up. Doesn’t work? Then Binance will liquidate your position and you will lose the bitcoin.
So there are certainly risks involved that you should not underestimate. Before you take out such loans, it is good to make sure that you have sufficient liquid assets on hand to add any money.
Bitcoin Backed Mortgage
A startup called Milo started offering bitcoin-backed mortgages in March. At this time works the company with 700 potential customers meets the conditions and already has 5 to 10 million dollars in mortgages outstanding. The interest on the mortgages is 3.95 to 5.95 percent and the loan may be repaid in bitcoin or US dollars.
Figure and Ledn are other startups working on the same idea. Figure charges an interest rate of 5.99 to 6.018 percent for a 30-year mortgage and has set a maximum of $ 20 million for the loans.