Borrowing against Bitcoin is an increasingly popular alternative to traditional mortgage loans. Here’s why it might be the smarter option when it comes to speed, cost, and global accessibility.
1. Processing Time
One of the most significant advantages of borrowing against Bitcoin is how quickly the process can be completed. With Bitcoin-backed loans, you can complete Know Your Customer (KYC) verification in minutes, and within the next 10 minutes, your Bitcoin can be sent on the blockchain. The entire loan process can be finalised in as little as 12 minutes.
In comparison, traditional mortgage loans are a lengthy and bureaucratic affair. Securing a mortgage can take weeks or even months, due to extensive credit checks, property appraisals, legal reviews, and underwriting processes. This time efficiency is a major reason why Bitcoin-backed loans are emerging as a faster alternative.
Read more: Understanding Crypto Loans: The Ultimate Guide
2. Repayment Process
Another important factor to consider is the ease and speed of using the digital asset collateral as a repayment alternative. If you need to repay your Bitcoin-backed loan, you can immediately convert the Bitcoin collateral to fiat and close your loan position in no time.
Contrast this with borrowing against your home, where you will have no flexibility if you want to quickly settle the mortgage debt by selling the property.
Read more: Crypto Loans vs Traditional Loans
3. Global Accessibility
Borrowing against Bitcoin also provides unparalleled global accessibility. Whether you live in a major city or a remote part of the world, all you need is an internet connection. This has empowered users in regions like rural Mexico, where accessing traditional financial services, such as opening a dollar-based bank account, might involve long trips and considerable effort.
By contrast, traditional mortgage loans are often geographically restricted and heavily reliant on local banking infrastructure, meaning that for those in more remote areas, the process of securing a loan can be incredibly difficult, if not impossible.
In addition to that, qualifying for a mortgage can be challenging for some people due to credit score requirements, proof of income, or complicated legal histories. With Bitcoin-backed loans, your eligibility is based on the Bitcoin you hold as collateral, bypassing many of the conventional lending barriers. This makes crypto loans a great option for freelancers, international workers, or people with unconventional financial situations.
4. Lower Costs
Bitcoin-backed loans tend to have lower fees and interest rates than traditional mortgages. There are no property appraisal fees, legal costs, or other administrative expenses that often make mortgages more expensive in the long run. Borrowers using Bitcoin avoid many of these added layers of expense, making it a more economical choice.
Read more: Crypto Backed Mortgages - What You Need To Know
5. Flexibility in Loan Amounts
Bitcoin-backed loans offer flexibility in terms of loan amounts. You can borrow as much or as little as you need, based on the value of the Bitcoin you hold. There are no minimum property valuations requirements tied to physical assets, which can be restrictive when borrowing against a home. This allows borrowers to tailor their loan to their exact financial needs without being tied down by rigid property-based valuations.
Why Use Ledn for a Bitcoin Loan?
If you’re considering borrowing against your Bitcoin, Ledn is one of the leading platforms in the space, offering several key advantages.
1. Security and Transparency
Ledn places a strong emphasis on security. They use industry-leading custodians like BitGo to store your Bitcoin in cold wallets, ensuring that your assets remain safe and protected. Ledn undergoes regular proof-of-reserves audits, meaning they transparently verify their reserves, ensuring client funds are always fully backed.
Read more: Security Measures for Bitcoin Loans
2. No Credit Checks
Unlike traditional financial institutions that require extensive credit checks and documentation, Ledn does not require credit history to approve your loan. As long as you have sufficient Bitcoin as collateral, you can access funds without the barriers posed by conventional lenders.
3. Flexible Loan Products
Ledn offers various Bitcoin-backed loan products, including the innovative B2X loan, which allows you to instantly double your Bitcoin holdings by using your current Bitcoin as collateral. This flexibility means you can use Ledn not only for borrowing but also to increase your exposure to Bitcoin’s potential upside or downside.
4. Competitive Interest Rates
Ledn’s Bitcoin-backed loans come with competitive interest rates, often lower than traditional mortgage or personal loan rates. This makes borrowing against your Bitcoin not only faster but also cheaper, providing you with more financial flexibility without high-interest obligations.
5. Global Access and Support
Ledn is a globally accessible platform, offering services to clients in over 100 countries. Whether you’re in a city or a remote location, Ledn provides easy access to Bitcoin-backed loans without the need for complex banking infrastructure. Their platform also supports multiple languages, ensuring borrowers worldwide have access to reliable support.
6. No Prepayment Penalties
Ledn allows you to repay Bitcoin-backed loans early without incurring penalties. This flexibility means that if you want to close your loan early or if Bitcoin’s value appreciates, you can sell your collateral, repay your loan, and avoid additional fees.
By choosing Ledn for your Bitcoin loan, you’re tapping into a secure, transparent, and globally accessible platform that offers competitive rates and flexible loan products without the red tape of traditional banking systems.
7. Market Volatility and Risk Management
One thing to consider when borrowing against Bitcoin is market volatility. Bitcoin's value can fluctuate dramatically, which could affect your loan’s collateral.
However, Ledn manages this risk by offering transparent terms for margin calls and liquidation, providing you with notifications when your loan-to-value ratio approaches certain thresholds. This ensures that you’re always in control and can take action to avoid liquidation, something that is more difficult to manage with a traditional mortgage.
Conclusion
In summary, borrowing against Bitcoin can be faster, more accessible, and cheaper than the conventional route of borrowing against your home. The immediacy of transactions and the freedom from traditional geographical and financial constraints make Bitcoin an attractive option for those seeking flexibility and efficiency in their borrowing strategies. Get started with Ledn and receive your funds within a day.
Disclaimer
This article is sponsored by 21 Technologies Inc. and/or its subsidiaries (“Ledn”) and is for general information, discussion, or educational purposes only and is not to be construed or relied upon as constituting legal, financial, investment, accounting, tax, estate-planning, or other professional advice or recommendation. Please read Ledn’s full Risk Disclosure Statement and Disclaimers.
