Crypto mortgage in the UAE

In this digital age, every sector keeps up with technological developments and streamlines processes to keep up with market demands. The real estate sector in the UAE is no exception. Buying property in the UAE is possible with cryptocurrency, allowing you to avoid paperwork and traditional means of payment. Moreover, it's becoming more and more common for Dubai real estate developers to offer investors cryptocurrency options for buying properties (although sale and purchase agreements are based on dirhams only, the official currency of the UAE). While the real estate market has embraced this trend, UAE banks still don't offer crypto-based mortgages and loans because they deem them too risky.

How do cryptocurrency and crypto mortgages work?

Cryptocurrencies are digital currencies that can be traded online for goods and services. The digital currencies use blockchain technology, a decentralized technology that manages and logs cryptocurrency transactions across a network of computers. In order to access real estate property, you need to exchange real currency for cryptocurrency, as cryptocurrency trading does not involve banks or other intermediaries. One of the most popular and largest cryptocurrencies is Bitcoin, but there are also Ethereum, Tether, USD Coin, BNB, XRP, Binance USD, Dogecoin, etc.

Crypto mortgages are very similar to traditional mortgages only they are secured by cryptocurrency holdings as collateral, instead of cash, stocks and bonds in traditional mortgages. At the end of the loan term, your crypto assets will be returned to you if you repay the mortgage on time.

Crypto mortgages in the USA

In what ways have other countries taken advantage of the rise of cryptocurrencies? In addition to cryptocurrency real estate purchases, crypto mortgages are increasingly entering the real estate market with a growing number of lenders that let homebuyers leverage their digital wealth in the USA. 

Some of the most successful crypto mortgage lenders in the USA include:

• Milo, a Florida-based startup, the first to offer crypto-backed mortgages in the U.S. for prospective homebuyers. Offering 30-year loans of up to $5 million at rates ranging from 3.95% to 5.95%, the company specializes in mortgages for real estate investment purposes. The borrower doesn't need a down payment with Milo (they can finance up to 100% of the property's value), and they accept bitcoin (BTC), ether (ETH) and stablecoins (USDC, USDT, Gemini USD) as collateral.

• USDC Homes offers crypto mortgages for individuals interested in purchasing Texas real estate. Bitcoin, Ethereum, USDC, and other cryptocurrencies are accepted as collateral, and the loan is offered at a rate between 5.5% and 7.5%. The collateral is staked, so interest accumulates on the collateral, which offsets the monthly payment.

• Figure, based in North Carolina, this company is launching a wait list for crypto-related mortgage loans up to $20 million, and will accept bitcoin and ether as collateral, offering 30-year fixed rate mortgages with monthly collateral adjustments as low as 6%.

• Salt, based out of Denver, Colorado, available for business or personal loans in almost every U.S. state. To provide people and businesses with financial freedom provided by access to fiat currency through blockchain assets, it plans to expand its lendable areas to other countries such as Bermuda, Brazil, Hong Kong, Switzerland, UAE, Vietnam and others. With Bitcoin, Ether, or Dogecoin, borrowers can lock in interest rates as low as 0.52 percent for cash loans from 12 to 60 months.

• BlockFi, based in New Jersey, the company currently offers up to a 50% Loan to Value (LTV) ratio on your crypto. Bitcoin, Ether, or Litecoin can be leveraged by borrowers to receive 12-month cash loans with interest rates starting at 4.5%.

To wrap up

It is predicted that in the next 5-10 years, cryptocurrency will revolutionize the process of getting a mortgage, buying and selling properties in the UAE, even though it has not yet reached mainstream use. Increasing market growth and competition between lenders for homebuyers' crypto riches will result in a broader range of digital assets being accepted.

Banking and real estate regulations and trends are largely aligned with those in the USA, which is why crypto mortgages may soon become a thing in the UAE as well. Stay tuned to our blog section for more information when it becomes available.

In the meantime, check out our offer of traditional mortgage options for UAE nationals, expats and non-residents along with our mortgage calculator that can help you estimate monthly installments and other accompanying costs. As for property options in Dubai, search through our portal or contact our dedicated professionals if you have any property or mortgage-related questions.  

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