Cliff bought 2 homes with Bitcoin mortgages: Clever… or insane?

Should you buy a house with a Bitcoin-backed mortgage? The dream is you pay off the house as Bitcoin goes up, the risk is you lose it all.

If youre one of the lucky people who own four to six Bitcoin or 111 to 166 ETH that’s enough to buy an average-priced house in the US or Australia.

But who wants to cash out their Bitcoin today when pundits like Samson Mow and Plan B are tipping it will be worth 10 times more in the future? The dream of a Bitcoin-backed mortgage is that you get a house today and still get to benefit from Bitcoins appreciation tomorrow.

If everything goes to plan, you just pay the interest each year, and in a few years’ time, hopefully pay off the mortgage with a smaller fraction of your Bitcoin holdings. The loans are quicker and easier to get than a standard mortgage too. All you need is Bitcoin worth approximately 50% more than the loan amount and youre good to go.

There are some big drawbacks however, with interest rates sometimes twice as high as ordinary mortgages. Holders face margin calls if the price of Bitcoin plummets and their loan-to-value (LTV) ratio drops too far.

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