Warning: Borrowing money to invest in a volatile asset is extremely risky. You should seek financial advice first and only invest what you can afford to lose.
How To Unlock Equity To Invest In Cryptocurrencies
Bitcoin and Bitcoin alternatives (altcoins) have come back in a really big way since 2017 and savvy investors have been jumping on the wave ever since.
There are currently more than 12,000 cryptocurrencies, and the growth rate is simply astounding. Between 2021 and 2022, the number of cryptocurrencies more than doubled.
They are a relatively new breed of investment so will banks allow you to refinance your home loan and unlock your equity to buy cryptocurrencies?
How Much Can I Borrow?
- You must have real estate as security for the home loan.
- You can borrow up to 80% of the value of your property.
- There are limits on the amount of equity that can be released.
- Independent financial advice is required as a condition of approval.
To discover whether you can refinance your mortgage to buy Bitcoin, please call us on 1300 889 743 or complete our free assessment form to speak with one of our specialist mortgage brokers.
How Fast Can I Refinance?
As with investing in any other type of share and managed fund on the stock market, timing is everything when investing.
To start investing in cryptocurrency quickly using your equity, you can organise a fast mortgage refinance (fast refi) if:
- A valuation is not required by the lender.
- You’re within your lender’s policy including owning less than 80% of the property value on your home loan and having a clear credit file.
- You are a pay as you go (PAYG) employee not self employed.
- You’ve been making perfect mortgage repayments.
- You qualify for a fast refinance such as XRO with Westpac.
- You provide all of your documents to us immediately and in one go.
If you meet the above requirements, you can usually get a good interest rate and have your loan advanced within two weeks.
Realistically though, refinancing takes 3 – 4 weeks.
You can get a private mortgage faster than this but they are prohibitively expensive.
How Much Equity Can I Release To Buy Bitcoins?
This would depend on your experience in investing, your net asset position and your income.
For example, if you are a high net worth investor with assets over $5 million, releasing $1 million in equity is not unreasonable if you know the risks that you’re taking.
However, if you have a low income and asset position and have no experience in investing then it will be much less.
There are no hard and fast rules: it really depends on what the lender deems as ‘reasonable’.
If we don’t feel comfortable with your plans then we won’t help you to get a mortgage.
We would also suggest you speak with an independent financial adviser who may suggest an investment class that’s more suited to your risk profile.
Tell us a little bit about your situation and we can tell you where you stand when it comes to refinancing your home loan to buy Bitcoin.
Call us on 1300 889 743 or fill in our online enquiry form today.
Get Independent Financial Advice
As cryptocurrencies are all volatile assets, we’re concerned that you may be gambling rather than investing.
It is likely for the price of Bitcoin to drop by more than 20% literally overnight!
For this reason, we require you to speak to an accountant or financial planner and for them to provide written evidence that they have given you financial advice prior to loan approval.
This ensures that you are aware of the risks and are not borrowing more than you can afford.
It also means we’re meeting our obligations under the National Consumer Credit Protection Act 2009 (NCCP Act).
Is It A Good Idea To Invest In Bitcoins?
For argument’s sake, a small investment in Bitcoins and altcoins as part of your overall diversified investment strategy can be considered reasonable.
However, you may not want to put all of your money into just one asset type.
Professional investors tend to diversify their assets between shares, property, cash, business, managed funds and other assets.
Having less than 5% of your assets in a less common asset class such as Initial Coin Offerings (ICOs) or cryptocurrencies is a common strategy that helps reduce investment risk.
Avoid Get Rich Quick Schemes
We’ve seen many people choose to invest their funds in different ways and consistently where something seems too good to be true it usually is.
Lenders normally regard the following as acceptable forms of investment and reasons for unlocking equity from real estate:
- Buying another property.
- Buying a business or investing in your business.
- Investing in stocks, shares or managed funds.
- Consolidating your debts, such as credit cards or personal loans, into your home loan.
- Buying a new car or boat.
- Renovating your home.
- Helping to pay for a holiday, wedding or medical expenses.
- To keep funds on standby for when you take maternity leave.
Bear in mind, you cannot refinance for illegal purposes.
What Type Of Cryptocurrencies Can I Invest In?
Since Bitcoin was launched in 2009, a number of cryptocurrencies have come onto the market.
They’re considered to be a subset of digital currencies but are also considered a subset of alternative currencies and virtual currencies.
Whatever the definition, the biggest difference these currencies and ‘traditional’ currencies have is that they’re decentralised from any central bank.
In many ways, Bitcoin was first introduced in response to the devastating effects of the Global Financial Crisis (GFC). The world was looking for an alternative.
Alternative cryptocurrencies available today include:
- Ethereum (ETH)
- Tether (USDT)
- US Dollar Coin (USDC)
- Binance Coin (BNB)
- XRP (XRP)
- Binance USD (BUSD)
- Cardano (ADA)
- Solana (SOL)
- Dogecoin (DOGE)
- and many more
Will Blockchain Technology Disrupt The Mortgage Market?
The use of smart contracts will allow fintech providers to challenge the banks by offering better deals to deposit holders and borrowers.
It also means a much faster and efficient settlement process.
Please read our blockchain mortgage page to stay up-to-date.
If you’re looking to refinance your home loan for investment purposes, please call us on 1300 889 743 or complete our free assessment form today.