mortgage in euros?

sheffield_lad

Hi guys, just a quick question is it possible and worthwhile to take advantage of the euro/£ rates where I get a mortgage in euros for a house purchase within the UK? Thus taking advantage of the STRONG euro.

Howard

dunstonh

Thus taking advantage of a week euro.

If you think the Euro is weak, then this certainly isnt for you.

Pobby

Ummmm weak euro against sterling?

sheffield_lad

lol, no I mean strong euro but same question. Above now corrected.

PolishBigSpender

It's certainly possible. Many people in my country get CHF mortgages on account of Switzerland having a stable currency and stable exchange rates.

However, you'd be an absolute idiot to get a UK mortgage in Euro. For one, look at what the five convergence tests are for the UK entry to the Euro. It's been stated time and time again that our entry will take place at around 72-73p per Euro. Could you really afford to have your mortgage cost almost 25% more?

feisty1

Quote: Hi guys, just a quick question is it possible and worthwhile to take advantage of the euro/£ rates where I get a mortgage in euros for a house purchase within the UK? Thus taking advantage of the STRONG euro.

Quote: lol, no I mean strong euro but same question

Howee.............What exactly are you on about?

opinions4u

Foreign currency mortgages were popular(ish) in the 90s when French interest rates were lower than UK ones.

Mortgages were advanced in Francs and converted in to Sterling to buy the property.

Repayments were amended quarterly to take in to account fluctuations in currency and interest rates.

And therein lies the problem.

(1) Interest rates change
(2) Exchange rates change
(3) There's a middle man taking a commission/spread when the repayments are converted from Sterling to the foreign currency.

Combine the interest rates rising and exchange rates performing unfavourably and what seemed like an unbelievably good deal at the outset turned in to a repayments nightmare.

Swings and roundabouts with two risk factors instead of one, plus somebody taking a cut every time you make a payment.

I'm not keen!

sheffield_lad

PolishBigSpender wrote: »

It's certainly possible. Many people in my country get CHF mortgages on account of Switzerland having a stable currency and stable exchange rates.

However, you'd be an absolute idiot to get a UK mortgage in Euro. For one, look at what the five convergence tests are for the UK entry to the Euro. It's been stated time and time again that our entry will take place at around 72-73p per Euro. Could you really afford to have your mortgage cost almost 25% more?

Yes I know meaning 1 euro would be worth around £1.49 See where I am coming from?

sdooley

only worthwhile if you have a really low LTV and a euro income.

If you are doing this for the purpose of currency speculation, you will achieve the necessary arbitrage cheaper with your local spread betting joint *


* please note spread betting can cost you your house

beingjdc

Strong Euro is bad news if it stays strong and you do this.

At the moment, a Euro costs 97p, so if your mortgage was 1000 Euros a month, it's be £970. If the Strong Euro goes up so it costs £1.10p, your mortgage will be £1100.

angus1024

Something slightly different . If you have some cash and think the pound will fall further against the euro then one could buy euros and later convert to GBP at a profit. I can not find out how you actually do this though - you can open an international account - but the exchange rate of GBP/EUR is poor (buy/sell idifference). Any ideas?.