There are some points we need to consider:

1) The person requests a loan of $100,000 payable in bitcoins
2) The person requests a loan of 12BTC (~$100,000)
3) the lender is a banker
4) the lender is a joe average

A question coming is, should contracts settle in fiat or Bitcoin? What about the interests.
If the contract is in dollars, for example, the lending portion of 12 bitcoins ( $100k) you repay 1% per month,  $1000 (without interest)
If the contract is established in Bitcoin, the loan part 12 Bitcoins and you repay 0.12 BTC per month (without interest)
You can end with a very very cheap interest rate to buy a house.

As a bank, it's easy if the borrower doesn't pay, it goes to the court, the bank seizes the house. remember in 2008 how many people in The US lost their house. Whatever, you will always have to pay soon or later.

For the average Joe, it's a bit more difficult. Yes, he can hire a lawyer and go to a justice court. How many time it will take? 3 Years or more to see a judge? A judge that will surely say he's not competent to give a judgment since he doesn't even know what you're talking when you say Bitcoin and the chance that Bitcoin itself has not really a legal status in the said country.

I don't say it's impossible but the average Joe it's not so easy as banks, not the same power. Since we claim 'Be your own bank', let's say I lend you 50BTC and you're supposed to repay 1BTC per month during + 4 years. The first year, you repay me regularly without incident, the second year you start to ask for a delay, the third year you're gone. Will I be able to seize the funds on your bank account as banks can do? No

Let's say now we use a smart contract. Not sure which, for exemple, if the total amount isn't repaid after 5 years, the house bought with the money changes its ownership to the lender. Will, it even be considered as a legal contract? you can't send your smart contract to the land registry and say now it's mine.