The Crypto Mortgage Advantage

Bitcoin’s recent surge past $100,000 has transformed the real estate landscape, making homeownership through crypto more accessible than ever. The synergy between blockchain and real estate has reached a new peak with this valuation. While crypto investors are often forward-thinking, hesitation remains when it comes to arguably the most significant investment—a home. Crypto mortgages are bridging that gap, offering innovative solutions for leveraging digital assets to secure properties.

How Do Crypto Mortgages Work?

Milo, the pioneer of crypto mortgages, has already originated well over $10 million in these groundbreaking loans. A crypto mortgage uses digital assets like Bitcoin or Ethereum as collateral, allowing borrowers to retain ownership of their crypto while securing a loan. Here is the step-by-step process:

1. Apply and Get Pre-Approved: Submit a loan application along with proof of your crypto asset ownership. Milo evaluates your crypto portfolio and other factors like credit history to pre-approve you for a maximum loan amount. 2. Pledge Crypto Collateral: Upon approval, transfer your cryptocurrency to an escrow account managed by Milo. This collateral secures the mortgage.

3. Close on the Loan: Finalize the loan paperwork and receive the mortgage funds, typically in US dollars, to purchase the property. No down payment is required since your crypto assets serve as collateral.

4. Make Payments: Repay the mortgage with monthly payments according to the agreed terms. The interest rate may vary based on the market value of your pledged crypto.

5. Regain Collateral: Once the loan is fully repaid, Milo releases your cryptocurrency back to you from the storage account.

Why Choose a Crypto Mortgage?

1. No Cash Down Payment Required Crypto mortgages eliminate the need for a cash down payment, offering 100% LTV financing. This unique feature enables borrowers to acquire properties without liquidating their digital assets or disrupting their investment strategies.

2. Liquidity Preservation By avoiding cash outlays, borrowers can retain liquidity to invest in other opportunities. For example, funds that might have gone into a 20% down payment can be reinvested in stocks, crypto, or other ventures, maximizing overall returns.

3. Avoid Capital Gains Tax and Maximize Upside Potential

Selling crypto to fund a home purchase often triggers capital gains tax and forfeits future upside. Consider this scenario:

• In 2022, Bitcoin’s value hovered at $15,000. To fund a $160,000 down payment, a borrower would need to liquidate approximately $188,235 in Bitcoin to account for a 15% capital gains tax.
• By December 2024, Bitcoin reached $100,000. The $188,235 worth of Bitcoin, if retained, would now be worth over $1.25 million. The decision to sell would mean losing $1.09 million in potential gains, in addition to the tax burden.

4. Collateral as a Safety Net Crypto mortgages offer an additional safety net: the collateralized crypto. If a borrower misses payments, the pledged assets can be liquidated to cover debt. However, Milo emphasizes responsible borrowing and requires proof of liquidity to prevent reliance on this buffer. Notably, Milo has never had to liquidate customer assets, underscoring the program’s stability.

Addressing Margin Call Concerns

A margin call occurs when the value of the collateral falls below a certain threshold, requiring borrowers to add more assets or risk liquidation. For Milo’s crypto mortgages, a margin call is triggered only if the collateral’s value drops by over 65%.

Historical Perspective on Bitcoin Volatility

Since Milo launched its crypto mortgage program in 2022, Bitcoin’s price fluctuations have been significant but have never triggered a margin call:

• 2022: "Bitcoin fell from $40,000 to under $16,000 during a volatile period. (60% decrease)
• 2023 Recovery: Bitcoin rebounded to $42,000 by the end of the year. (rebounded to a +5% valuation)
• 2024 Surge: Bitcoin soared past $100,000 following the debut of Bitcoin ETFs. (+150% growth since 2022)

Even during periods of extreme volatility, Bitcoin’s value has not dropped by the 65% threshold necessary to trigger a margin call. This resilience underscores the stability of Milo’s crypto mortgage program and the asset class itself.

Conclusion

Crypto mortgages offer unparalleled advantages for investors looking to leverage their digital assets. With no cash down payment required, liquidity preservation, and the ability to avoid capital gains taxes, this innovative solution allows borrowers to maximize their financial potential. While margin calls remain a concern, Milo’s program design and Bitcoin’s historical performance provide reassurance that this risk is minimal. By embracing crypto mortgages, investors can unlock new opportunities without sacrificing their long-term financial goals.

The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.