Foreign Currency Mortgages

rustie

Hi everyone...
We are looking to purchase property in Spain - renovation project - and have just found out about foreign currency mortgages...consistently much lower interest rates and similar conditions as mortgages here...what are the pros' and cons - it seems almost too easy..?

Anyone have any information about these mortgages? Any experience?

It would seem you can even have a foreign currency mortgage for a British property - so why aren't we all benefitting from these...well kept secret?

Any info gratefully received!
Thanks
Rustie

lisyloo

"consistently much lower interest rates and similar conditions as mortgages here"

Who has told you this?
I don't believe there is a guarantee of consistently lower rates anywhere.
What is available is a risk.
There are two risks that I can think if.
One is currency risk (IF you are paying the mortgage in a foreign currency).
If the exchange rate goes against you then it could be more expensive.
This doesn't apply to some mortgages where you pay in sterling.
The other risk is interest rate risk.
If you are lnked to some other coutries rate e.g. US LIBOR, then it could rise whilst incomes are not rising in this coutry.

"...what are the pros' and cons"

The pros are that it might be cheaper.
Cons are the risk involved.

"- it seems almost too easy..?"

I don't think you have fully appreciated the risk involved.
These mortgages could cost you dear if interest rate or currency fluctuations work against you and there could be panalties.

"It would seem you can even have a foreign currency mortgage for a British property - so why aren't we all benefitting from these...well kept secret?"

You MIGHT benefit but you don't seem to be appreciating that this is a gamble and most people (post the endowment scandal) don't want to gamble with their home.
My advice would be that if youa re considering this gamble you do a great deal more research into the downsides i.e. you examine historical interest rates and currecny fluctutation to asses the risk of it going against you.
You also consider the high penalties etc.

Recently I have been looking at US libor mortgages.
These currently look great because the rates are low.
However US rates are likely to rise a lot more that UK rates and I think some people could be dissapointed as they haven't taken this into account.
I have taken it into acount and decided not to take the risk.

At the end of the day it's up to you whether you take the gamble.
But please appreciate that it is a GAMBLE.
These mortgages do not come with a guarantee of being cheaper.

lisyloo

By the way - everytime I've discussed these mortgages (usually US LIBOR) with the brokers on these boards they have advised against (for the reasons I've specified).

Now these guys work in the industry everyday, so I take heed of their opinion.