High interest accounts of 20%

elaine

Living in Turkey we can get 19-20% interest. We have invested in a monthly income acccount which provides use with a monthly income, 15% tax is payable. Have a property in UK as well as here. Thinking of getting a loan in the UK & investing here. Need some good loan rates, what are your views please.

Baldur

The first thing that I would ask myself before thinking of loans is what level of deposit protection do Turkish savings accounts have and how the high levels of inflation in Turkey/currency fluctuations could affect your ability to repay any sterling loans.

I have a couple of accounts in Bulgaria, where I have a property, but would be very careful about having large deposits there, where the savings guarantee is only 40,000 Leva (approx. €20,000) and the Lev is pegged to the Euro, currently minimalising possible currency fluctuations in comparison with the Turkish Lira.

Bromley86

This is effectively what many Icelanders have been doing to finance their personal debt - "basket loans". They've borrowed in foreign currencies to make use of the lower interest rates, but now the Krona has fallen sharply they're facing much higher repayments (and not just the interest - the loan itself has increased massively).

No doubt citizens in other countries have done the same. I'm equally sure that in the current climate they're considering repatriating those loans.

http://www.bloomberg.com/apps/news?pid=20601109&sid=am95H4YHyr50&refer=home

opinions4u

Baldur wrote: »

The first thing that I would ask myself before thinking of loans is what level of deposit protection do Turkish savings accounts have and how the high levels of inflation in Turkey/currency fluctuations could affect your ability to repay any sterling loans.

I have a couple of accounts in Bulgaria, where I have a property, but would be very careful about having large deposits there, where the savings guarantee is only 40,000 Leva (approx. €20,000) and the Lev is pegged to the Euro, currently minimalising possible currency fluctuations in comparison with the Turkish Lira.

Genuine care.

I remember the pound being pegged to the ERM (effectively what is now the Euro).

It ended in tears!

opinions4u

Baldur wrote: »

The first thing that I would ask myself before thinking of loans is what level of deposit protection do Turkish savings accounts have and how the high levels of inflation in Turkey/currency fluctuations could affect your ability to repay any sterling loans.

I have a couple of accounts in Bulgaria, where I have a property, but would be very careful about having large deposits there, where the savings guarantee is only 40,000 Leva (approx. €20,000) and the Lev is pegged to the Euro, currently minimalising possible currency fluctuations in comparison with the Turkish Lira.

Careful.

The £ was pegged to the ERM once as well.

It didn't work out.

Baldur

opinions4u wrote: »

Careful.

The £ was pegged to the ERM once as well.

It didn't work out.

Quite, that's why I was negative about the issue of having any significant deposits even in an EU state like Bulgaria, much less in an EU 'wanna be' like Turkey.

isofa

Wouldn't touch with a bargepole.

gozomark

elaine wrote: »

Thinking of getting a loan in the UK & investing here.

do you mean investing or saving ?

Bromley86

Of course, if you could (a) get a loan that didn't require repayment until the expiry date and (b) get a forward contract to fix the exchange rate when the loan did expire, you might be able to make it work risk free.

I'd be surprised if there was a way for a normal person to make money - futures contracts are set up by pretty bright people, so you can bet they've thought of this.

gozomark

Bromley86 wrote: »

Of course, if you could (a) get a loan that didn't require repayment until the expiry date and (b) get a forward contract to fix the exchange rate when the loan did expire, you might be able to make it work risk free.

I'd be surprised if there was a way for a normal person to make money - futures contracts are set up by pretty bright people, so you can be they've thought of this.

the forward contact is priced off interest rate differentials

purch

Yes,

The Forward Rate would reflect the difference in Interest Rates, as that is all it is, a calculation based on the Interest rates against current Spot.

The way to benefit would be to run the position open, and hope that the reason why Turkish interest rates are so much higher than everywhere else is wrong.