Would bank be concerned about a house deposit arising from crypto profits?

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lucashood1977

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If someone has a deposit for a house but accrued it by putting their savings into crypto currencies would the banks look unfavourabley toward that?
 
As a source of deposit I wouldn't think so. It would be looked at was a positive return from a risky investment.
 
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Its a legitimate source of funds like a return on an investment or a win at cheltenham
 
I would expect a negative reaction, regardless of whether the Bank is honest about it, or not.

Irish Banks still see crypto as a bad word - at best, they'll consider you an extremely high risk investor, or gambler, at worst, they'll suspect that you obtained the wealth through illegal activities.

When all is said and done, traditional banks generally still see cryptos as the enemy - undermining traditional regulated currencies, money transmission systems etc.

I think I would move it back into euro, and put it into a savings account now. Then leave it there, perhaps for over a year, before going near a mortgage provider.
 
Its what it says on the tin.

Crypto gains are a legitimate source of funds as is a gambling win.
Banks probably would not look favourably on it though. Perhaps they should though.
 
@lucashood1977
Taking your previous post into consideration, since you don't already have investments it looks like you're looking for a get rich quick scheme. Or gambling is what the banks call it.

To answer the question you asked as best I can at the moment as this is an evolving area.

There are 2 separate aspects to your deposit:
1. Affordability / sustainability
2. The total minimum deposit you need.

On the first, the bank wants comfort that you will be able to repay any mortgage they advance to you. So you want a track record of saving every month, and your rent can factor in there. You'll need a minimum 6 clean months before you apply, but longer is better. You cannot rely on investment profits (crypto or otherwise) for this portion.
My advice is put that into a deposit account with a bank. No messing around with it. That'll make up for simplicity say 5% of your purchase price.

Then there's the minimum deposit, let's say you need 10%, so another 5%. That can come in all manners; savings, investments, a gift from parents, or a lottery win for example.

Now, the tricky bit. A return on a diversified share portfolio is fine. A lottery win is fine. A big win on the races isn't. It's down to risk - someone who wins 10k on horses this year is more likely to lose that amount, or more, at any stage in the future, and be unable to pay their mortgage.

At the moment, crypto sits somewhere in between all that, and treatment varies by lender. As an investment, its highly speculative. Especially over the short term. But, so long as the amount you're putting in each month is 'disposable' income (after factoring in your mortgage payments) it won't be a problem with at least some of the banks. Don't go putting all your savings in every month, and don't make large once off purchases which would potentially flag as high risk activities.

It's most likely that you will need to convert it back to Euro and deposit it with a regulated bank before it will be considered for your mortgage application. Be prepared to have lots of paperwork showing your money trail, and the source of funds before it was invested in crypto. Check if the platform you plan to buy through produce clear statements. Don't go routing your money through lots of payment services - if the underwriter has to do work it's easier to reject your application.

But I would caution all of the above. You're not sitting on unrealised crypto gains, so why would you be even looking at crypto if you've just started saving? Can you stomach 20%+ losses in a single day? Getting in now, with a view to buying a house in 12 months is really gambling in my view.
 
ThatNewGuy said:
Assuming you've paid your taxes on the gains, then it'd be fine
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Have you experience using crypto gains as a source of income on a mortgage application? Getting money as a gift is also fine from a legal perspective, but not from a perspective of a bank assessing your ability to put aside money from salary on a regular basis.
 
Leo said:
Have you experience using crypto gains as a source of income on a mortgage application? Getting money as a gift is also fine from a legal perspective, but not from a perspective of a bank assessing your ability to put aside money from salary on a regular basis.
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Fair, talking in legality terms rather than overall assessment. RedOnion gave an excellent response which i think covers the broader subtext in any case. But yes I had crypto gains in my account balance as part of my house deposit, and made absolutely sure to show a requisite labelled Revenue payment on the same. Wasnt asked any queries on it but was probably considered in lieu of everything else they reviewed anyway
 
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lucashood1977 said:
If someone has a deposit for a house but accrued it by putting their savings into crypto currencies would the banks look unfavourabley toward that?
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They key word here that I think is being overlooked slightly is that it's for the deposit only.
The OP isn't asking about crypto being relied upon to repay the mortgage, just to form the deposit.

I can't see there being any issue with this, provided your other regular / normal income is sufficient for the LTI and stress tested for the repayments.
 
Alkers86 said:
The OP isn't asking about crypto being relied upon to repay the mortgage, just to form the deposit.
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Notwithstanding this, the facts when viewed in their entirety are that any borrower that has shown a propensity for gambling may well be looked upon in a less than favourable light.
 
Alkers86 said:
They key word here that I think is being overlooked slightly is that it's for the deposit only.
The OP isn't asking about crypto being relied upon to repay the mortgage, just to form the deposit.

I can't see there being any issue with this, provided your other regular / normal income is sufficient for the LTI and stress tested for the repayments.
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Banks do ask questions as to the source of funds for the deposit, unless you show a savings record over the previous 6 months that tallies with your balance, they may dig deeper.
 
SparkRite said:
Notwithstanding this, the facts when viewed in their entirety are that any borrower that has shown a propensity for gambling may well be looked upon in a less than favourable light.
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Would you equate investing in stocks with gambling? Why should investing in cryptocurrency be considered gambling rather than investing?
 
Seagull said:
Would you equate investing in stocks with gambling? Why should investing in cryptocurrency be considered gambling rather than investing?
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As above well covered in the appropriate forum, but you'd have to be worried about any bank that would look on a market that is completely unregulated, deals in obfuscation and anonymity, and so open to manipulation as even coming close to equivalence with the stock market.
 
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