Bitcoin-backed mortgages in Canada, is it a good idea?

[Sanitough]

I don't know if its a big news for Canadians who are planning to buy a house through mortgage.

Because -- APX Lending is planning to offer Bitcoin-backed mortgages in Canada starting in 2027.

A buyer could pledge a certain amount of Bitcoin as collateral, it could either cover the down payment only or the entire price of the house.

For example, according to APX Lending's CEO, a homebuyer could use their Bitcoin as collateral to borrow money for the down payment instead of selling their BTC.
They are also planning an option where Bitcoin and the house itself could both serve as collateral to finance the entire property.

Of course, there's still a risk since the price of Bitcoin could fall, and borrowers might be required to add more collateral or face liquidation depending on the agreed terms.

This is kinda secure on their part since if both the house and Bitcoin are used as collateral, they will have two assets securing the loan so there's a little less risk on their part, but probably convenient on our side too as we don't need to sell our Bitcoin or produce more money upfront for the mortgage. And according to the report, their Bitcoin custody is handled by BitGo.

However, the final interest rates and mortgage terms haven't been announced yet.

So do you think this is attractive to Bitcoin holders who are planning to buy a house?

[YOSHIE]

Bitcoin-backed mortgages in Canada, is it a good idea?

Interestingly enough, when we talk about credit, the one thing that comes to everyone's mind is the monthly "installment".
In my view, legally and also the regulations that currently exist in Canada, opening Bitcoin-based credit services in Canada is certainly quite good.

But in my view it is not good for those who take credit, Bitcoin is very risky in terms of price movements, ok if the price of Bitcoin falls, but what if the price of Bitcoin rises.
But as long as the credit process is running there is an agreement between the two parties that credit installments are measured in dollars, even though using Bitcoin is not a problem, they still send Bitcoin according to the dollar amount in the agreement.

But when the initial credit agreement is paid in Bitcoin between two parties, for me it is not a good idea, maybe people can be happy when the Bitcoin price drops, cry when the Bitcoin price skyrockets.

[Sanitough]

But in my view it is not good for those who take credit, Bitcoin is very risky in terms of price movements,

I think they are professionals, so they know the risk, after all they will offer that service if they have not calculated the risk.

ok if the price of Bitcoin falls, but what if the price of Bitcoin rises.

1- If it fall, as stated they are required to put additional collateral or the company will be force to liquidate it, depending on the agreement.

2- If it rises, the bitcoin will remain in custody of bitgo, it will not be touch and the borrower will be able to receive it back once the mortgage is fully paid.

[Upgrade00]

I think they are professionals, so they know the risk, after all they will offer that service if they have not calculated the risk.

The risk is mostly not theirs to bear, but that of the borrower. They try to come up with attractive offers to convince you to choose their service among the competition. Attractive offers come with added risk which you have to consider.
If you back up your bitcoins, they are no longer yours until the mortgage is fully paid (you are trusting they return to you smoothly at the time) or it is completely liquidated.

[Sanitough]

I think they are professionals, so they know the risk, after all they will offer that service if they have not calculated the risk.

The risk is mostly not theirs to bear, but that of the borrower. They try to come up with attractive offers to convince you to choose their service among the competition. Attractive offers come with added risk which you have to consider.
If you back up your bitcoins, they are no longer yours until the mortgage is fully paid (you are trusting they return to you smoothly at the time) or it is completely liquidated.

Exactly, because if the loan is not paid, they can liquidate the Bitcoin and at the same time they can also foreclose on the house to recover the unpaid loan. I think it's even more favorable to the lender since there's Bitcoin as additional collateral, usually for mortgage loans the house itself serves as collateral, and they also evaluate the capacity of the borrower, that's why in the past there was a housing bubble because lenders kept releasing loans even to borrowers who couldn't afford them, it happened in the USA.

[LFC_Bitcoin]

I certainly won’t ever be handing over custody of any of my coins to a third party as collateral to borrow fiat. It may work for some people but it goes against everything that Satoshi created Bitcoin for.

You should use Bitcoin to be your own bank, to make your life better. If you sell some to put a deposit down to buy a house that’s fine but I don’t like the idea of giving up control of holding them. 

[Z-tight]

A mortgage typically lasts for ~ 30 years, that's a long time to use your BTC as a collateral. A lot can happen within that time with the price of BTC and the safety of your coins, and it's not nice to be in that situation. I don't like the idea of a BTC-backed loan, and i have said that a couple of times in this board, but i think the idea is worse when we are talking about a very long loan.

Imagine handing your BTC over to a third party for this long, what if they get hacked and lose your coins sometime along the line.

[macson]

A buyer could pledge a certain amount of Bitcoin as collateral, it could either cover the down payment only or the entire price of the house.

I'd rather choose to save up some money first or even sell some of my Bitcoin if needed than take a home financing scheme like this.

We never know what’s going to happen with the platform, especially when the mortgage term is longer, like over 5 years. No one can guarantee that there won't be issues with the platform during that time.

Home financing isn't an easy thing. It's usually more complicated. I'd rather play it safe than trust my Bitcoin to a platform that hasn't proven to be trustworthy.

[passwordnow]

So do you think this is attractive to Bitcoin holders who are planning to buy a house?

A better alternative than someone selling their coins to buy a house. You get work still and pay that mortgage while having hopes that your btc will be returned in the same quantity once you pay that obligation, only if you like this option. But, I don't see any difference from those other threads about the banks allowing customers to use their bitcoins as collateral. The matter here is if you're really decided and willing to give up custody as you take the loan. If it's me, I'll don't do it and will still opt for the regular mortgage and won't reveal that to them that  I own little amount of btc.

[Aliciaworld]

I certainly won’t ever be handing over custody of any of my coins to a third party as collateral to borrow fiat. It may work for some people but it goes against everything that Satoshi created Bitcoin for.

You should use Bitcoin to be your own bank, to make your life better. If you sell some to put a deposit down to buy a house that’s fine but I don’t like the idea of giving up control of holding them. 

I think Bitcoin has long decorated from the original plan and it keeps going.

[OcTradism]

I don't know if its a big news for Canadians who are planning to buy a house through mortgage.

Because -- APX Lending is planning to offer Bitcoin-backed mortgages in Canada starting in 2027.

A buyer could pledge a certain amount of Bitcoin as collateral, it could either cover the down payment only or the entire price of the house.

So do you think this is attractive to Bitcoin holders who are planning to buy a house?

It's good for Bitcoin adoption because Bitcoiners will have another legal option to use their bitcoin, with this case as a collateral for their house mortgage. Generally it's good for Bitcoin adoption and community but individually at least with me, I won't use my bitcoin as a collateral for anything, including a house mortgage.

I dislike this use case because it's risky, while I am quite sure that with Bitcoin growth, if I can hold my bitcoin safely, don't lose it a long the way, I will get profit. In contrast if I use my bitcoin as a collateral for a loan, a house mortgage, the volatility of Bitcoin market can cause me loss, loss of my precious bitcoin. I can not control Bitcoin market, can not know what market makers want to do, so my collateral with bitcoin will never be completely safe.

[Ziskinberg]

Imagine handing your BTC over to a third party for this long, what if they get hacked and lose your coins sometime along the line.

Yes anything can happen, just like what happened to Binance when they were hacked and lost billions but good thing they still compensated their customers and kept their funds SAFU though, but what if it happens to a small exchange like in this case, if a hack happens, then the bitcoin could be gone especially if the price really skyrockets.

But here's another thing since you can choose the collateral either for the down payment or the whole mortgage amount, if I would avail of this, I would choose the smaller collateral amount, and if ever Bitcoin pumps to a value that could possibly cover the loan, then I would request to include in the agreement that the collateral can be liquidated to pay off the loan, that way the risk is minimized.

[ObeyKnock]

It's good for Bitcoin adoption because Bitcoiners will have another legal option to use their bitcoin, with this case as a collateral for their house mortgage. Generally it's good for Bitcoin adoption and community but individually at least with me, I won't use my bitcoin as a collateral for anything, including a house mortgage.

I dislike this use case because it's risky, while I am quite sure that with Bitcoin growth, if I can hold my bitcoin safely, don't lose it a long the way, I will get profit. In contrast if I use my bitcoin as a collateral for a loan, a house mortgage, the volatility of Bitcoin market can cause me loss, loss of my precious bitcoin. I can not control Bitcoin market, can not know what market makers want to do, so my collateral with bitcoin will never be completely safe.

Yes, there is some risk here. If BTC crashes and you cannot add more collateral to your position then you can lose your coins. This has happened many times now with crypto loans.
 However, it can be useful for some. They can purchase a house without having to sell their Bitcoin and pay taxes. As long as you have a low LTV and have some extra BTC to hand it isn’t completely mad.

It’s a great step for adoption. It gives another legitimate way to use Bitcoin.
 However, personally, I would only do this if I had a very low LTV and a large amount of safety margin. Most people should just be cautious when using this type of leverage.

[mirakal]

A mortgage typically lasts for ~ 30 years, that's a long time to use your BTC as a collateral. A lot can happen within that time with the price of BTC and the safety of your coins, and it's not nice to be in that situation. I don't like the idea of a BTC-backed loan, and i have said that a couple of times in this board, but i think the idea is worse when we are talking about a very long loan.

Imagine handing your BTC over to a third party for this long, what if they get hacked and lose your coins sometime along the line.

That's the biggest risk there. Losing your bitcoin which is very possible, either through inside job or outside job. And then what will happen next? Ask another bitcoin to replace the lost one? That's the most ridiculous thing to do.

It may sound an opportunity for those who really aim to buy a house, but considering how long the term is, the assurance for long-term safety and security of the coins might be impossible. You could have hold your bitcoin longer instead and buy when you're able to, at least you're still the sole owner and the bank of your own.

[pooya87]

I think it is a terrible idea.
On one hand I hate loans in general and have never even thought about them so on principle I say mortgage is terrible idea as well regardless of what this is.
On another hand the bitcoiner in me is also saying it is a terrible idea since you'll have to give up your precious bitcoins and we are talking about a large amount since the collateral for such a loan should be high.

But I get that a lot of people still find mortgage and loans in general useful so the only thing I can say is that they should pay extra attention to their contract (the loan agreement) because we know how deceitful the banksters are. They will surely add terms in it that would benefit them greatly in case of both dropping price and rising price, while ripping you off.
If price goes down, they could be demanding more collateral or even demand a higher interest rate to cover it.
If price goes up, they may end up not giving you back your bitcoins in full. For example they could come up with an arbitrary and imaginary exchange rate and say this is what they recognize and give you a small portion of what you gave them as collateral. Our banksters did that a couple of years ago in a project that didn't last long to get people to open bank accounts where they'd deposit their foreign currencies. Those who opened such accounts didn't get what they deposited because the banksters came up with an arbitrary exchange rage, converted the initial deposit to local currency, then used that exchange rate to give back only a portion of what was deposited!

[Japinat]

If price goes up, they may end up not giving you back your bitcoins in full. For example they could come up with an arbitrary and imaginary exchange rate and say this is what they recognize and give you a small portion of what you gave them as collateral.

it's possible but I believe there's a lower chance of that happening. Your bitcoin used as collateral is considered property and normally collateral will only be liquidated when problems occur, so when bitcoin rises in value it's not a problem and that will even minimize the risk for the bank.

The only reason I see for it to be liquidated is when the borrower stops paying. But you are right, the contract has to be checked but I'm confident that the contract is not something designed to deceive customers as that would destroy their reputation in the industry.

[OsaiEmma]

~snip

So do you think this is attractive to Bitcoin holders who are planning to buy a house?

The other day, I saw Bitcoin being used as collateral for loans, now this. Honestly, this gives Bitcoin more real life utility and it has broaden my perspective on Bitcoin: Bitcoin is a financial instrument that can better ones financial status not just by hodling alone, but by trading, carrying out different financial investment services (like strategy), and now, provide loan services and mortgage. This is way beyond just a P2P exchange and a store of value. I'm even more interested to see how Bitcoin will be applied in the future.

[davis196]

Is it a good idea for the banks? Definitely. Is it a good idea for the borrowers? I don't think so. Mortgages are the most lucrative financial services offered by banks(I mean lucrative for the banks, not the borrowers  ). I would be really cautious, if a bank offers me a mortgage.
All the risk is carried by the borrower(for 25-30 years ahead). The bank gets all the profits and if something bad happens, the bank takes your house. It's a no brainer for the banks to offer mortgages. If the BTC collateral drops in value, the borrower has to add more money. I wonder why most banks don't offer loans and mortgages, which are backed by gold as a collateral. Is Bitcoin becoming more preferred by the banks in comparison to gold?

[BlackBoss_]

I think it is a terrible idea.
On one hand I hate loans in general and have never even thought about them so on principle I say mortgage is terrible idea as well regardless of what this is.
On another hand the bitcoiner in me is also saying it is a terrible idea since you'll have to give up your precious bitcoins and we are talking about a large amount since the collateral for such a loan should be high.

Risk is bigger than potential benefit and I'd like to hold my bitcoin, wait for its growth while in meantime I continue working, getting money, and can use part of it for my saving or accumulating more bitcoins.

I can either hold my bitcoin together with extra saving from my salary, or hold my bitcoin and use part of my salary for bitcoin accumulation with time. Then time will help my bitcoin portfolio has better ROI, and it will come to a right time for selling my bitcoin to buy things I want, like a house.

It's the safest approach while making a loan, deposit bitcoin as a collateral is very risky. I never want to take risk and have probability of losing my bitcoin while I am very sure my bitcoin portfolio will increase in value with time.

[Die_empty]

That's the biggest risk there. Losing your bitcoin which is very possible, either through inside job or outside job. And then what will happen next? Ask another bitcoin to replace the lost one? That's the most ridiculous thing to do.

It may sound an opportunity for those who really aim to buy a house, but considering how long the term is, the assurance for long-term safety and security of the coins might be impossible. You could have hold your bitcoin longer instead and buy when you're able to, at least you're still the sole owner and the bank of your own.

This might be a good opportunity to own a house if the mortgage company is insured. I mean, if there is a guarantee that clients will receive full compensation if uncertainties like hacks, bankruptcy, and others happen in the future. Except that there is an urgent need to own a house, I would rather rent an apartment until I can afford to buy a house than transfer the custody of my Bitcoin to a third party.